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Please note that The Daily Shot will not be published on Thursday, Nov. 26th and Friday, Nov. 27th.
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
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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
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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
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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
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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.
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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
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
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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
The United Kingdom
1. Last month’s retail sales topped economists’ forecasts.
Here is the evolution of retail sales by sector.
Source: Pantheon Macroeconomics
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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
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3. The UK 2020 GDP contraction stands out.
Source: OECD Read full article
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
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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
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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
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
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:
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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
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.
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
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2. South Africa’s fiscal situation has deteriorated.
Source: Alpine Macro
And there isn’t much room to boost taxes.
Source: Alpine Macro
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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
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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
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
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3. Here is Bitcoin priced in gold.
Source: BofA Global Research
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.
Energy
1. The Brent contango continues to ease (curve flattening).
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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
Equities
1. The recent flows into stock funds have been extreme (2 charts).
Source: BofA Global Research
Source: @jessefelder, @markets Read full article
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2. Bullish sentiment is also near extremes (2 charts).
Source: Evercore ISI, @matthew_miskin
Source: Goldman Sachs, @ISABELNET_SA
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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
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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
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5. “Zombie” companies are outperforming.
Source: Arbor Research & Trading
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
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2. The market value of negative-yielding debt hit a record high.
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
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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
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