The Daily Shot: 12-Jan-21
• Administrative Update
• Equities
• Rates
• Commodities
• Energy
• Cryptocurrency
• Emerging Markets
• China
• South Korea
• Europe
• The United Kingdom
• Canada
• The United States
• Global Developments
• Food for Thought
Administrative Update
• We have noticed that a number of subscribers have been redistributing The Daily Shot, which is a violation of our terms of use.
• Please note that subscribing with a single email address and sharing it among multiple readers constitutes redistribution.
• Please help keep The Daily Shot independent and ad-free. Information on group/enterprise discounts is available here.
Back to Index
Equities
1. Tech stocks came under pressure on Monday in the aftermath of the Capitol attack last week.
Source: BBC Read full article
• Nasdaq 100:
• Communication Services:
• Tech:
Value shares outperformed.
——————–
2. The total market cap of negative-earning IT firms is nearing the $1 trillion mark.
Source: @KailashConcepts
3. This table shows the frequency of S&P 500 pullbacks (down 4% to 8%) in the first quarter of each calendar year.
Source: Longview Economics
4. The Russell 2,000 held long-term support relative to the Nasdaq 100, …
Source: Dantes Outlook
… and the ratio has risen along with Treasury yields over the past few months.
Source: BCA Research
——————–
5. Since its launch in 2003, the S&P 500 equal weight index has outperformed the S&P 500 (which is cap-weighted) by about 1.2% per year.
Source: S&P Global Market Intelligence
Here is the sector distribution of the equal-weight index.
Source: S&P Global Market Intelligence
——————–
6. There was a dramatic reversal in relative performance across the S&P 500 cap spectrum last year.
Source: S&P Global Market Intelligence
7. US factory activity points to a rebound in revenues.
Source: Yardeni Research
8. US companies with weak balance sheets have been outperforming since the vaccine news last fall.
9. The median age of companies going public has collapsed.
Source: BCA Research
10. Analysts remain concerned about frothy valuations.
• The S&P 500 12-month forward P/E ratio:
Source: BCA Research
• Price-to-sales, price-to-book, and price-to-cash flow:
Source: BCA Research
• Market capitalization relative to the GDP:
Source: @StrategasRP, @johnauthers Further reading
——————–
11. Extreme investor enthusiasm is also a concern. Here are the flows into the ARK Innovation ETF.
h/t Bianco Research
12. Rising bond yields could pressure global equities.
Source: BCA Research
Back to Index
Rates
1. The 10yr – 2yr Treasury yield spread topped 1% for the first time since 2017 as the curve steepens.
2. Treasury term premium is recovering quickly.
3. Next, we have the decomposition of Treasury yields into real rates (TIPS yield) and inflation expectations.
Source: @WSJ Read full article
4. How much would the 10yr Treasury yield rise without the Fed’s QE program?
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
5. Here is how the distribution of inflation outcomes has shifted in the options market.
Source: Goldman Sachs
6. This chart shows the Oxford Economics’ estimate for the neutral rate (r*).
Source: Oxford Economics
7. Below is a summary of the Fed’s emergency programs and their utilization.
Source: @WSJ Read full article
Back to Index
Commodities
1. Gold is at support.
Source: barchart.com, h/t @MarkCCranfield
2. Gold miners’ cash flow has improved.
Source: @TaviCosta Read full article
3. European emission contracts continue to rally as the EU implements stricter environmental rules.
Back to Index
Energy
1. The US rig count is recovering as oil prices strengthen.
2. European refinery margins have rebounded from the pandemic lows.
3. Asia is importing more US LNG as the US-Asia natural gas price differential explodes.
Source: @WSJ Read full article
Source: @WSJ Read full article
Back to Index
Cryptocurrency
1. Trading volume on major cryptocurrency exchanges reached a new all-time high.
Source: CoinDesk Read full article
2. The number of Bitcoin accounts (addresses) holding more than 1,000 Bitcoin has surged along with the price last year.
Source: CoinDesk Read full article
3. What is the correlation between Bitcoin and other asset classes?
Source: CFA Institute
4. Which demographic groups are most familiar with Bitcoin?
Source: Morning Consult Read full article
Back to Index
Emerging Markets
1. India’s central bank is starting to pull some liquidity from the market.
Source: @markets Read full article
Short-term bond yields climbed, and the curve flattened.
——————–
2. Israel is facing mounting disinflationary pressures as the currency continues to strengthen.
3. Mexico’s industrial production was firmer than expected in November.
4. EM (ex-China) equity flows finished 2020 in negative territory.
Source: IIF
Overall capital flows recovered strongly last year compared to previous stress episodes.
Source: IIF
——————–
5. EM foreign exchange reserves increased sharply last year.
Source: TS Lombard
6. This chart shows EM growth in Q2 and Q3 of last year.
Source: Gavekal Research
Back to Index
China
1. Let’s start with the distribution of last year’s consumer spending.
Source: ANZ Research
2. Chinese demand for Japanese goods is rising.
Source: TS Lombard
3. Chinese companies raised quite a bit of money in the US.
Source: @financialtimes Read full article
4. There is a new small outbreak of COVID cases in China.
Source: Gavekal Research
5. Hong Kong will broaden its cross-border investment channels with mainland China’s stock exchanges.
Source: South China Morning Post Read full article
6. The UK may extend its passport program for Hong Kong citizens.
Source: Statista
Back to Index
South Korea
• South Korean stocks outperformed sharply this week.
Source: @DavidInglesTV
• Equity prices rose with trade activity over the past year.
Source: BCA Research
• Exports finished the year on a strong note.
Source: Barclays Research
Back to Index
Europe
1. The Sentix investor confidence indicator was softer than expected.
2. Spain’s November industrial production report was disappointing.
3. Ireland has been hit hard by COVID.
Source: Goldman Sachs
4. Here is the evolution of the euro-area excess reserves.
Source: ECB Read full article
5. This chart shows government budget deficits across the Eurozone.
Source: ECB Read full article
6. When will the EU hit herd immunity?
Source: Commerzbank Research
Back to Index
The United Kingdom
1. The BRC retail sales index remains elevated.
2. This chart compares last year’s consumption trends in the UK with France, Germany, and Italy.
3. UK port activity has slowed, and time in port has increased in recent days.
Source: Huq Read full article
4. What do CFOs think about the points-based immigration system?
Source: Statista
Back to Index
Canada
1. Bond yields have risen sharply (driven by higher Treasury yields).
2. Consumer confidence has recovered to pre-pandemic levels.
3. Business outlook improved substantially over the past two quarters.
4. Inflation expectations continue to rise.
Source: Scotiabank Economics
5. The market is pricing in a neutral rate of interest that is at the low-end of the Bank of Canada’s estimated range.
Source: Scotiabank Economics
6. The iShares Canadian value ETF (XCV) is rising relative to the iShares Canadian growth ETF (XCG).
Source: Dantes Outlook
7. Here is how Canada’s budget deficit compares to other developed countries.
Source: Scotiabank Economics
8. When will Canadians get vaccinated?
Source: Scotiabank Economics
Back to Index
The United States
1. According to Nomura’s estimate, the core CPI moderated last month.
Source: Nomura Securities
• Rent has been dragging inflation lower during the COVID downturn.
Source: Nomura Securities
• When will inflation reach the Fed’s target?
Source: @markets Read full article
——————–
2. Next, we have some updates on employment.
• Will another huge stimulus injection deliver a full labor market recovery by 2023?
Source: Moody’s Analytics
• Manufacturing employment continues to lag the recovery in pay.
Source: @WSJ Read full article
• Here is the IHS Markit forecast for the 2021 rebound in nonfarm payrolls.
Source: @WSJ Read full article
• This chart shows the drivers of labor slack.
Source: @ernietedeschi
——————–
3. Scotiabank expects another massive increase in government debt as a percent of GDP.
Source: Scotiabank Economics
4. Inventories of construction materials remain depressed amid the pandemic-driven residential construction boom.
5. According to BCA Research, US households have accumulated $1.5 trillion of “excess” savings.
Source: BCA Research
6. When will the GDP return to its pre-pandemic path?
• Deutsche Bank:
Source: Deutsche Bank Research
• Morgan Stanley:
Source: Morgan Stanley Research
Back to Index
Global Developments
1. Global equity valuations have surged, partly driven by declining bond yields (2 charts).
Source: BCA Research
Source: BCA Research
——————–
2. Here are the CPI components for select economies.
Source: OECD Read full article
3. This chart demonstrates the decline in labor force participation as a result of the pandemic.
Source: BlackRock
4. According to Morgan Stanley, central banks’ balance sheets won’t peak before the end of 2022.
Source: Morgan Stanley Research
5. The global output gap is expected to shrink this year.
Source: Mizuho Securities USA
——————–
Food for Thought
1. US student debt across income and wealth levels:
Source: @WSJ Read full article
2. Top ten most spoken languages:
Source: Visual Capitalist Read full article
3. Net population flows in select US cities:
Source: @WSJ Read full article
4. US box office earnings:
Source: Statista
5. Parents struggling to pay rent:
Source: CBPP Read full article
6. Changes in vaccination intentions:
Source: Statista
7. Vaccine sources and destinations:
Source: The Economist Read full article
8. Vaccine demand and supply:
Source: Fitch Ratings
9. COVID deaths (per 100k):
Source: @financialtimes Read full article
10. How Americans view the Capitol building attack:
Source: Statista
11. Georgia Senate runoffs turnout:
Source: FiveThirtyEight Read full article
12. Lying about someone’s cooking:
Source: @YouGovAmerica Read full article
——————–
Back to Index