US housing inventory, measured in months of supply, is the lowest on record

The Daily Shot: 23-Nov-20
Administrative Update
The United States
Canada
The United Kingdom
The Eurozone
Europe
Asia – Pacific
China
Emerging Markets
Cryptocurrency
Commodities
Energy
Equities
Rates
Global Developments
Food for Thought



 

Administrative Update

 
Please note that The Daily Shot will not be published on Thursday, Nov. 26th and Friday, Nov. 27th.


Back to Index

 

The United States

1. Let’s begin with the housing market.
 
Mortgage rates hit another record low.
 
Source: @WSJ   Read full article  
 
Homebuilder optimism points to further gains in residential construction.
 
Source: Capital Economics  
 
The median mortgage downpayment hit a multi-decade high. The latest wave of housing transactions has been driven by households with high credit scores and plenty of cash.
 
Source: @business   Read full article  
 
The inventory of homes for sale, measured in months of supply, is the lowest on record.
 
Source: @WSJ   Read full article  

——————–

 
2. US daily new COVID cases are approaching 200k.
 

 
Below is the share of US states (GDP-weighted) where daily infections are rising.
 
Source: ANZ Research  
 
The Princeton Energy Advisors model suggests that infections are about to peak.
 
Source: Princeton Energy Advisors  

——————–

 
3. For now, the recovery has stalled. Here are some high-frequency indicators.
 
The ANZ normalization index:
 
Source: ANZ Research  
 
Job postings:
 
Source: @WSJ   Read full article  
 
Restaurant activity:
 
Source: Goldman Sachs  
 
Hotel occupancy:
 
Source: Morgan Stanley Research  
 
In-store retail foot traffic:
 
Source: Scotiabank Economics  
 
Consumer-facing small business closures:
 
Source: Goldman Sachs  

——————–

 
4. Black Friday and Cyber Monday online spending is expected to hit a record as shoppers shun brick & mortar stores.
 
Source: @financialtimes   Read full article  
 
Source: Scotiabank Economics  

——————–

 
5. Below are some updates on inflation.
 
This year’s spike in the nation’s money supply has been unprecedented.
 
Source: @KatusaResearch  
 
Will it lead to a higher CPI in the months ahead?
 
Source: Pantheon Macroeconomics  
 
The US and Eurozone CPI indices have diverged. The gap between these measures usually doesn’t last very long.
 

 
The PPI report showed business margins (“trade services”) in several high-demand areas spiking this year.
 
Source: Pantheon Macroeconomics  
 
The dollar continues to drift lower, which will keep pushing up import prices.
 

——————–

 
6. As we saw last week (#4 here), US import demand has spiked, far outstripping exports. West Coast ports have now become extremely congested, with the slowdown exacerbated by labor and equipment shortages.
 
Source: @business   Read full article  
 
7. BlackRock estimates a lower GDP shortfall compared to the 2008 financial crisis, even with a renewed lockdown scenario.
 
Source: BlackRock  
 
The chart below shows the GDP trajectory vs. pre-recession trends (“shortfalls”).
 
Source: @TCosterg  


Back to Index

 

Canada

1. The September retail sales report surprised to the upside.
 

 
It’s been a v-shaped recovery.
 
Source: Scotiabank Economics  
 
Here are the changes by sector (since February).
 
Source: Scotiabank Economics  

——————–

 
2. Just like in the US, the flight from urban areas is visible in the rental markets.
 
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital  


Back to Index

 

The United Kingdom

1. Last month’s retail sales topped economists’ forecasts.
 

 
Here is the evolution of retail sales by sector.
 
Source: Pantheon Macroeconomics  

——————–

 
2. The government borrowing spike has been unprecedented, but the latest increase was below economists’ expectations and official forecasts.
 

 
Source: Pantheon Macroeconomics  
 
Meanwhile, tax receipts held up better than the government has been predicting.
 
Source: Pantheon Macroeconomics  

——————–

 
3. The UK 2020 GDP contraction stands out.
 
Source: OECD   Read full article  


Back to Index

 

The Eurozone

1. Consumer confidence weakened this month as the second wave takes its toll.
 

 
This trend poses downside risks for retail sales.
 
Source: Pantheon Macroeconomics  

——————–

 
2. High-frequency indicators point to economic activity stabilization in Europe.
 
Source: @markets   Read full article  
 
Here is the Princeton Energy Advisors model forecast for Italy’s new cases.
 
Source: Princeton Energy Advisors  

——————–

 
3. Italy’s industrial output has held up well.
 

 
4. Merkel’s approval ratings remain strong.
 
Source: @MorningConsult   Read full article  
 
5. What will be the impact of including owner-occupied housing costs in the CPI?
 
Source: @markets   Read full article  


Back to Index

 

Europe

1. EU COVID cases appear to have peaked.
 
Source: TS Lombard  
 
2. The latest rally in European shares has been broad.
 
h/t @mikamsika  
 
3. This chart shows the recent trends in new office leasing activity.
 
Source: @WSJmarkets   Read full article  
 
4. Poland’s industrial recovery continues (2 charts).
 

 
Source: ING  


Back to Index

 

Asia – Pacific

1. Taiwan’s export orders are 9% above last year’s levels.
 

 
2. South Korea’s exports strengthened further this month.
 

 
3. Australia’s business activity is accelerating.
 
Manufacturing PMI (as of November):
 

 
Manufacturing employment (PMI):
 

 
Services PMI:
 

——————–

 
4. Next, we have some updates on New Zealand.
 
The Q3 retail sales rebound was well above consensus.
 

 
Credit card spending is recovering.
 

 
Speculative accounts have covered their short Kiwi dollar positions.
 
Source: Danske Bank  


Back to Index

 

China

1. The benchmark stock index hit a multi-year high.
 

 
2. The renminbi has not moved into the “outright expensive” territory, according to BCA Research.
 
Source: BCA Research  
 
3. The level of Chinese firms’ short-term foreign obligations has remained steady over the past couple of years.
 
Source: BCA Research  
 
4. Hong Kong’s inflation remains depressed. The government’s emergency relief measures (in housing) have distorted the headline figures.
 

 


Back to Index

 

Emerging Markets

1. Let’s begin with some updates on Russia.
 
Retail sales:
 

 
Wage growth:
 

 
The unemployment rate:
 

 
Cargo shipments:
 

 
Speculative accounts have been betting against the ruble.
 
Source: Danske Bank  

——————–

 
2. South Africa’s fiscal situation has deteriorated.
 
Source: Alpine Macro  
 
And there isn’t much room to boost taxes.
 
Source: Alpine Macro  

——————–

 
3. The Zambian kwacha continues to weaken as government debt spikes.
 

 
Source: @adam_tooze, The Economist   Read full article  
 
Source: @adam_tooze, @financialtimes   Read full article  

——————–

 
4. India’s lockdown restrictions have been easing.
 
Source: Goldman Sachs  
 
5. These charts show the recovery in EM vs. DM industrial production and retail sales.
 
Source: @PkZweifel  


Back to Index

 

Cryptocurrency

1. Bitcoin was not able to break $19k.
 

 
2. Altcoins came to life on the back of the Bitcoin rally, with XRP going vertical.
 
Source: EWN   Read full article  
 

——————–

 
3. Here is Bitcoin priced in gold.
 
Source: BofA Global Research  


Back to Index

 

Commodities

1. Gold fund outflows have been severe on the back of the vaccine news.
 
Source: BofA Global Research  
 
2. Copper is testing resistance.
 

 
3. US lumber futures are rising again.
 
Source: @WSJ   Read full article  
 
4. This chart shows the total open interest in commodity futures relative to the last five years.
 
Source: DTN   Read full article  
 
5. Next, we have some updates on US grains.
 
Drought conditions are expected to expand in the US southern plains. This is one reason behind the rally in grain futures.
 
Source: @ToddHultman1  
 
Soybean futures held resistance at $12 a bushel.
 

 
Corn futures keep climbing.
 

 
Here is Bloomberg’s grains index.
 


Back to Index

 

Energy

1. The Brent contango continues to ease (curve flattening).
 

 

——————–

 
2. Oil inventories at Cushing, OK (the settlement hub for WTI futures) have been climbing.
 

 
3. The SPDR oil and gas exploration and production ETF (XOP) is attempting to break its 200-day moving average.
 
Source: @DantesOutlook  


Back to Index

 

Equities

1. The recent flows into stock funds have been extreme (2 charts).
 
Source: BofA Global Research  
 
Source: @jessefelder, @markets   Read full article  

——————–

 
2. Bullish sentiment is also near extremes (2 charts).
 
Source: Evercore ISI, @matthew_miskin  
 
Source: Goldman Sachs, @ISABELNET_SA  

——————–

 
3. Short interest in S&P 500 stocks continues to hit new lows.
 
Source: Goldman Sachs, @jsblokland  
 
Most of the losses that short sellers experienced this month were in tech stocks.
 
Source: @markets   Read full article  

——————–

 
4. Here is the recent relative performance of value vs. growth for large-, mid-, and small-cap stocks.
 
Source: Yardeni Research  
 
And this chart shows the relative performance by sector.
 
Source: Yardeni Research  

——————–

 
5. “Zombie” companies are outperforming.
 
Source: Arbor Research & Trading  


Back to Index

 

Rates

1. The US yield curve has been flattening. Some analysts expect the Fed to shift its purchases to longer-dated Treasuries while keeping the dollar amounts of QE unchanged.
 
Source: @markets   Read full article  
 
Should the Fed decide to move towards a weighted average maturity of 10 years in the SOMA portfolio, it could temporarily dampen steepening in the Treasury curve. But this may not work as well as it did in 2011-2012 (Operation Twist), according to Nordea.
 
Source: Nordea Markets  
 
Fund managers expect the curve to steepen.
 
Source: BofA Global Research  

——————–

 
2. The market value of negative-yielding debt hit a record high.
 


Back to Index

 

Global Developments

1. Here is a look at current EM and DM equity market performance versus previous decades.
 
Source: S&P Global Market Intelligence  
 
2. Large-business credit-card spending remains depressed, according to American Express (mostly due to reduced corporate travel and entertainment budgets).
 
Source: MarketDesk Research  
 
3. Swiss watch exports, an indicator of luxury demand, are recovering.
 

 
4. Global M&A activity picked up in Q3, with large deals helping to drive the increase, according to S&P. There were 12 transactions with a $10 billion-plus deal value.
 
Source: S&P Global Market Intelligence  
 
5. This chart shows equity market valuations relative to their historical averages.
 
Source: TS Lombard  
 
6. Next, we have the fiscal and monetary support for 2020-2021 for select economies.
 
Source: BlackRock  
 
7. Here are the busiest international routes this month.
 
Source: @markets   Read full article  


——————–

Back to Index

 

Food for Thought

1. Video game players’ demographics:
 
Source: Visual Capitalist   Read full article  
 
2. Podcast listeners’ demographics:
 
Source: Morning Consult   Read full article  
 
3. AI’s impact on society:
 
Source: @pewglobal   Read full article  
 
4. US presidents’ age when they took office:
 
Source: Statista  
 
5. Election news sources:
 
Source: @MorningConsult   Read full article  
 
6. The “Hispanic vote”:
 
Source: Mehlman Castagnetti Rosen & Thomas  
 
7. Policymakers taking scientific advice in dealing with COVID:
 
Source: The Economist   Read full article  
 
8. The pandemic’s impact vs. containment measures:
 
Source: The New York Times   Read full article  
 
9. The Black Friday experience:
 
Source: @CivicScience   Read full article  
 
10. Five spaceships parked at the International Space Station:
 
Source: @Space_Station   Read full article  

——————–


Back to Index