Hoarding is back

The Daily Shot: 20-Nov-20
The United States
The United Kingdom
Europe
Japan
China
Emerging Markets
Cryptocurrency
Commodities
Energy
Equities
Credit
Food for Thought



 

The United States

1. The Philly Fed’s manufacturing report showed continued strength in the region’s factory activity this month.
 

 
New orders remain robust.
 

 
And there is a substantial backlog of work.
 

 
Hiring is back at 2019 highs.
 

 
More manufacturers have been raising prices.
 

 
Facing the pandemic headwinds, manufacturers were less upbeat about the future.
 

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2. The Kansas City Fed’s manufacturing report was also relatively strong.
 


 
However, hiring has slowed.
 

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3. US sales of previously owned homes hit a multi-year high for this time of the year – up 24% vs. 2019 (3 charts).
 

 

 
Source: Mizuho Securities USA  

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4. Next, we have some updates on freight activity.
 
Based on container shipments at US ports, imports are far outpacing exports.
 
Source: Arbor Research & Trading  
 
Domestic shipping volumes are now up year-over-year.
 
Source: Cass Information Systems  
 
US trucking fleets have shrunk this year.
 
Source: Cass Information Systems  
 
Rising demand for freight transport and tight capacity sent truckload rates sharply higher.
 
Source: Cass Information Systems  
 
Intermodal shipping rates are still soft.
 
Source: Cass Information Systems  

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4. Here are some updates on the labor market.
 
The recovery is stalling.
 
Source: JP Morgan, @SteveRattner  
 
Initial unemployment claims rose last week as the pandemic takes its toll.
 
Source: @GregDaco, @OxfordEconomics  
 
Long-term unemployment has been climbing.
 
Source: @bopinion   Read full article  
 
As regular state unemployment benefits run out, emergency programs kick in.
 
Source: @GregDaco, @OxfordEconomics  
 
But these emergency programs are about to end. Will Congress act?
 
Source: Reuters   Read full article  
 
Source: Oxford Economics  
 
This chart shows the unemployment rate in the lowest- vs. highest-earning industries.
 
Source: Leuthold Group, @axios   Read full article  

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5. The US Treasury is pulling the plug on some of the emergency programs it put in place with the Fed (red arrows below).
 
Source: @colbyLsmith, @JamesPoliti, @FT   Read full article  
 
Source: @WSJ   Read full article  
 
The Treasury wants some of its liquidity back.
 
Source: @BloombergQuint   Read full article  

 
By the way, the Fed’s balance sheet hit another record high this week.
 

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6. The economy has been dependent on federal aid this year.
 
Source: @BrookingsInst, @dlacalle_IA  
 
Is all the excess liquidity sufficient to keep the rebound going?
 
Source: Variant Perception  

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7. Here are some updates on the pandemic.
 
COVID-related hospitalizations hit another record high.
 
Source: CovidTracking.com  
 
Infections at nursing homes are soaring.
 
Source: @bpolitics   Read full article  
 
Chase credit card spending ticked higher. JP Morgan suspects the increase was driven “by a jump in spending in supermarkets and wholesale clubs …” Hoarding is back, although not to the extent we saw in March.
 
Source: JP Morgan, @carlquintanilla  
 
Source: The Washington Post   Read full article  
 
Source: @CivicScience  


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The United Kingdom

1. The recovery in industrial orders is slowing.
 

 
2. Consumer confidence is back near the 2020 lows.
 

 
3. Housing demand is moderating.
 
Source: Pantheon Macroeconomics  
 
4. This chart shows the trend in self-employment.
 
Source: IFS   Read full article  


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Europe

1. Euro implied volatility hit the lowest level since March after the US elections.
 
h/t @vkaramanis_fx  
 
2. Eurozone portfolio flows turned negative.
 
Source: Pantheon Macroeconomics  
 
3. The Netherlands unemployment rate is gradually declining.
 

 
4. Sweden’s unemployment rate fell more than expected.
 

 
5. Swiss industrial production remains soft.
 


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Japan

1. The core CPI is in negative territory, although the decline wasn’t as large as expected.
 

 
2. Manufacturing recovery stalled this month.
 

 
And services continue to struggle (PMI < 50).
 


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China

1. China’s large-cap index is at resistance.
 
Source: CNBC, h/t Charlie Zhu   
 
2. Will we see more corporate bond defaults ahead?
 
Source: ANZ Research  
 
3. Investors have been selling high-rated state-owned-enterprise (SOE) bonds in provinces where local governments have poor reputations, according to Gavekal.
 
Source: Gavekal   
 
4. The renminbi still looks cheap, based on its real effective exchange rate.
 
Source: Pantheon Macroeconomics  
 
5. Gains in industrial production have been moderating.
 
Source: Pantheon Macroeconomics  
 
6. Here is China’s total debt-to-GDP ratio over time.
 
Source: IIF  


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Emerging Markets

1. In a bold move, the Turkish central bank delivered a 475 bps hike to support the currency.
 

 
The lira climbed further.
 

 
Stocks continue to rally.
 

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2. The Philippine central bank cut rates again as credit expansion slows.
 
Source: Reuters   Read full article  
 

 
Source: ING  

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3. Confidence indicators in India remain depressed.
 
Source: Pantheon Macroeconomics  
 
4. Fund managers think that EM stocks will outperform next year.
 
Source: @ISABELNET_SA, @BofAML  


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Cryptocurrency

1. Bitcoin continues to soar.
 

 
2. Bitcoin’s market cap made an all-time high at $334 billion.
 
Source: @OspreyFunds  
 
3. Open interest in bitcoin options has shot up to a record high.
 
Source: CoinDesk   Read full article  
 
4. The spread between the cost of bitcoin puts and calls has eased, suggesting that investors are starting to hedge against a price pullback.
 
Source: CoinDesk   Read full article  
 
5. Bitcoin ownership is becoming more concentrated again.
 
Source: @markets   Read full article  
 
6. Bitcoin trades more like a risk asset rather than a safe-haven product.
 
Source: @bopinion   Read full article  


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Commodities

1. Industrial metals keep climbing.
 

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2. This chart shows the weekly changes in gold ETFs’ holdings.
 

 
3. China’s pork prices have declined sharply as the herd recovers.
 
Source: @WSJ   Read full article  
Source: @WSJ   Read full article  
 
US hog futures are lower.
 

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4. Coffee futures are rallying after Nicaragua and Honduras were hit by Hurricane Iota.
 

 
5. Hershey has been sourcing cocoa in the US futures market, perhaps trying to circumvent the West African cocoa premium. Cocoa futures are up sharply.
 
Source: @BloombergQuint   Read full article  
 

 


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Energy

1. Global oil inventories are expected to keep falling next year, supporting Brent prices.
 
Source: Longview Economics  
 
2. US natural gas futures continue to slump amid warmer weather.
 


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Equities

1. Hedge funds’ stock picks have been widening their outperformance.
 

 
2. Fund managers are upbeat.
 
Source: @ISABELNET_SA, @BofAML  
 
3. Global equity valuations appear stretched relative to history.
 
Source: Variant Perception  
 
However, valuations based on the CAPE ratio are not as excessive.
 
Source: Variant Perception  

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4. International stocks (ex. US) have been correlated with the trend in value versus growth over the past few years. Will we see a rotation out of US stocks?
 
Source: BCA Research  
 
5. After a massive spike, US equity issuance is expected to return to a more normal pace next year.
 
Source: @ISABELNET_SA, @GoldmanSachs  
 
6. US SPAC activity skyrocketed in Q3, accounting for 56.3% of the total US IPO proceeds raised during the quarter.
 
Source: S&P Global Market Intelligence  
 
7. Real yields of safe assets, like TIPS, will likely remain low, encouraging investors to hunt for yield elsewhere – perhaps in equities (according to Capital Economics).
 
Source: Capital Economics  
 
8. It’s been a volatile year – especially to the upside.
 
Source: SPDR Americas Research, @mattbartolini   Read full article  
 
9. Here are the largest members of the S&P 500 by market value.
 
Source: @WSJ   Read full article  


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Credit

1. US investment-grade bond yields are near the lows again.
 

 
2. Here are the most vulnerable retailers.
 
Source: S&P Global Market Intelligence  
 
Many retailers are still not paying rent (or making partial payments).
 
Source: @markets, h/t @DiMartinoBooth   Read full article  


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Food for Thought

1. Taxes on groceries, candy, and soda:
 
Source: @TaxFoundation   Read full article  
 
2. Tax refunds in 2017 and 2019:
 
Source: @TaxFoundation   Read full article  
 
3. Here are a couple of updates on the vaccine.
 
Americans’ comfort level with getting vaccinated (2 charts):
 
Source: BCA Research  
 
Source: @CivicScience   Read full article  
 
Vaccine delivery timing (odds):
 
Source: Moody’s Analytics  

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4. Countries with the largest number of refugees:
 
Source: European Union Agency for Fundamental Rights   Read full article  
 
5. Iranians don’t have much confidence in their government.
 
Source: Gallup   Read full article  
 
6. Election results certification deadlines in select US states:
 
Source: @bpolitics   Read full article  
 
7. Priorities for Biden’s first 100 days:
 
Source: Morning Consult   Read full article  
 
8. Cocaine levels in wastewater across Europe:
 
Source: Statista  

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Have a great weekend!


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