The Daily Shot: 23-Dec-20
• Administrative Update
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Asia – Pacific
• China
• Emerging Markets
• Commodities
• Equities
• Rates
• Global Developments
• Food for Thought
Administrative Update
Please note that The Daily Shot will not be published from Thursday, December 24th through Friday, January 1st.
As a reminder, scheduling updates are available online at https://thedailyshot.com/administrative-updates/
The United States
1. The Conference Board’s consumer confidence index is back near pandemic lows this month.
Consumer confidence among Americans 55 and older hit the lowest level since 2016.
Households are pessimistic about business conditions.
Some economists expect the vaccine progress and the new stimulus bill to boost sentiment next month – assuming the relief package is not delayed.
Source: Reuters Read full article
The labor differential (the spread between “jobs plentiful” and “jobs hard to get” indices) deteriorated in December.
Americans seem to be less interested in buying a car, and fewer are making vacation plans.
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2. Here is an indication of how Americans may spend their stimulus checks.
Source: Morgan Stanley Research
3. Fewer credit applications were approved this year.
Source: The Daily Feather
4. Home sales eased last month but remained well above 2019 levels.
Year-to-date sales are also higher than last year.
The inventory of homes for sale is now the lowest in decades.
• Total inventory:
• Months of supply:
• Realtor.com active listings:
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5. The Richmond Fed’s regional manufacturing index strengthened this month.
However, the assessment of business conditions and expectations were softer.
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6. State revenues have surprised to the upside in a number of cases this year.
Source: @UpshotNYT Read full article
It appears to be a consequence of the K-shaped recovery.
The New York Times: – This recession, distinct from many before it, has piled its worst effects on low-wage workers. That means that state budgets that rely the most on wealthier residents to fund government haven’t been hurt as much by an economic crisis that left the well-off largely unscathed.
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7. Finally, this chart shows the contribution of different sectors to the third-quarter GDP rebound.
Source: BEA, @GregDaco
Canada
1. Consumers remain in good spirits during this holiday season.
Source: Scotiabank Economics
2. USD/CAD is at short-term support.
Source: @DantesOutlook
The United Kingdom
1. The 2-year gilt yield hit a record low.
2. The government’s pace of borrowing remains unprecedented, although it has been below official forecasts.
3. The UK is still ahead in vaccinations.
Source: @redouad Read full article
The Eurozone
1. German consumer confidence declined further.
German trucking activity remains elevated.
Source: Pantheon Macroeconomics
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2. The euro-area manufacturing PMI is underperforming the US, which is a negative for EUR/USD over the short-term.
Source: BCA Research
3. The gap between the euro-area and US inflation expectations remains wide.
Source: IMFS Read full article
4. The Eurozone yield curve (aggregate) has not been steepening as it has in the US.
Source: Pantheon Macroeconomics
5. How soon will the GDP return to pre-pandemic levels?
Source: TS Lombard
6. Euro-area’s aging population will be a drag on growth.
Source: Pantheon Macroeconomics
Source: Pantheon Macroeconomics
Europe
1. The SNB’s equity holdings (as % of Swiss GDP) spiked this year and are well above other central banks.
Source: Natixis
2. Next, we have some updates on Sweden.
• Retail sales (through November):
• Consumer and manufacturing sentiment (through December):
• EUR/SEK is at support:
Source: @TheTerminal, Bloomberg Finance L.P.
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3. The Euro Stoxx 600 index is at resistance.
Source: BCA Research
Asia – Pacific
1. The relative return of Singapore equities versus developed Asia is at an extreme low.
Source: MarketDesk Research
2. Australia’s private credit growth continues to slow, driven by softer business lending.
Housing credit expansion remains stable.
China
1. Credit growth likely peaked in October, marking the first phase of policy normalization, according to Gavekal Research.
Source: Gavekal Research
Reduced government bond issuance will lower total debt growth next year.
Source: Gavekal Research
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2. Hong Kong’s current account balance hit a new high.
Emerging Markets
1. Brazil’s consumer confidence is weakening.
Separately, Brazil has some of the highest tariffs in the world.
Source: @adam_tooze, @OECDeconomy Read full article
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2. Latin American equities have underperformed the MSCI All World ex-US index over the past few years. Is it time for a reversal?
Source: MarketDesk Research
3. The December World Economics SMI report shows that India’s business activity is not yet in growth mode. This contradicts the trends we see from Markit PMI (here and here). Employment has been particularly soft.
Source: World Economics
Separately, the Diwali celebrations did not create a meaningful spike in COVID cases.
Source: Pantheon Macroeconomics
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4. Fund flows to EM stocks have been weak this year.
Source: Alpine Macro
Commodities
1. Iron ore has pulled back from the highs.
• Singapore:
• China:
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2. US soybean exports to China remain elevated.
3. Brent crude is trading below $50/bbl (current support is $49.20).
Source: barchart.com
Equities
1. Has the S&P 500 peaked relative to stocks in other advanced economies?
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
2. Have US stocks peaked vs. commodity prices?
Source: Stifel
3. Ultra-low bond yields have contributed to rising equity valuations (two charts).
Source: BCA Research
Source: MarketDesk Research
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4. The gap between stocks and consumer confidence keeps widening.
Source: Piper Sandler
5. Will investors reduce risk exposure, given near-term weakness in the US economy?
Source: BCA Research
6. The most shorted stocks in the Russell 3000 (broad) index continue to widen their outperformance vs. the S&P 500, punishing short-sellers.
Source: Goldman Sachs, Bloomberg
7. The correlation between GDP growth and equity market returns has been negative.
Source: Oxford Economics
8. Tesla helped the MSCI USA index outperform the S&P 500.
Source: @WSJ Read full article
Here is the S&P Completion Index, which includes all US shares except those in the S&P 500.
Source: @WSJ Read full article
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9. The bounce in value vs. growth (relative performance) has been short-lived.
Momentum shares are rebounding.
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10. Small caps keep widening their outperformance.
11. Cybersecurity shares continue to rally.
Source: @markets Read full article
Rates
1. Coupon Treasury auctions (notes and bonds) have risen to records this year.
Source: Deutsche Bank Research
2. Large tech companies own a considerable amount of Treasuries.
Source: Deutsche Bank Research
3. Here is the market-implied path for the fed funds rate.
Source: BCA Research
4. This chart shows the percentage of outstanding public debt held by central banks (US, UK, Eurozone, and Japan).
Source: Natixis
Global Developments
1. Oxford Economics expects non-US equities to outperform over the next five years.
Source: Oxford Economics
2. What is the expected impact of current pandemic restrictions on the GDP?
Source: Goldman Sachs
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Food for Thought
1. Large US clothing retailers’ sales relative to 2019:
Source: @BloombergQuint Read full article
2. US car reliability scores:
Source: Statista
3. More money …
Source: @MorningConsult, @politico Read full article
4. Watching sports less frequently:
Source: @AlexMSilverman, @MorningConsult Read full article
5. Cancelling travel plans:
Source: @CivicScience, @CDCgov
6. Coronavirus conspiracy theories:
Source: UCMC
7. US combat aircraft maintenance costs:
Source: Statista
8. Trends in forested areas around the world:
Source: @chartrdaily
9. Christmas cookies:
Source: @YouGovAmerica Read full article
10. The elf workshop productivity index:
Source: Huq Read full article
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The next Daily Shot will be out on Monday, January 4th.
Happy holidays!