The Daily Shot: 14-Jan-21
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Japan
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Equities
• Rates
• Global Developments
• Food for Thought
The United States
1. The headline CPI ticked higher in December, driven by gasoline prices.
• Energy CPI (year-over-year) will rebound in the coming months due to base effects and higher prices.
• Core inflation was in line with expectations.
• Shelter has been a drag on the core CPI, …
… but that may be changing in the months ahead (OER = owners’ equivalent rent).
Source: Pantheon Macroeconomics
• Medical care inflation has also been pulling the core CPI lower (driven by the pandemic).
Source: Pantheon Macroeconomics
• Here are a few other CPI components.
– New and used vehicles:
– Apparel:
Note that the US dollar weakness should boost apparel prices further (most US apparel is imported).
Source: Pantheon Macroeconomics
– Restaurants (the second chart shows fast-food inflation):
– Haircuts:
– Cleaning products:
– Washing machines:
• The key pandemic-driven trend in inflation has been the divergence between commodities vs. services CPI.
Source: Piper Sandler
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2. Mortgage applications to purchase a home started the year on a strong note.
Refinancing activity is also robust.
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3. Here is the distribution of unemployed workers by reason for unemployment.
Source: @BLS_gov Read full article
4. US household net worth spiked last year as home prices and stocks soared.
Source: Morgan Stanley Research
5. The 2021 budget deficit continues to widen, running well above the levels in previous years.
And there is much more spending to come …
Source: Morning Consult
Entitlement spending is expected to continue higher.
Source: Alpine Macro
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6. Mobility in California is now back to its Apri low due to renewed lockdown measures.
Source: Arbor Research & Trading
7. Finally, we have quarterly and annual GDP growth distributions.
Source: Morgan Stanley Research
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Canada
1. The Oxford Economics recovery tracker continues to trend lower, driven mostly by the health situation.
Source: Oxford Economics
2. Speculators are now net-long the Canadian dollar for the first time since early last year.
Source: Mizuho Securities USA
USD/CAD is holding long-term resistance.
Source: Dantes Outlook
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The United Kingdom
1. The housing market remains hot.
2. UK stocks started the year on a strong note.
Source: @WSJ Read full article
3. Lockdowns appear to be working.
Source: Pantheon Macroeconomics
4. This chart shows the Oxford Street foot traffic (Europe’s busiest shopping street).
Source: Huq Read full article
5. How do UK hospitals compare to those in other European cities?
Source: @ThereseRaphael1, @bopinion Read full article
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The Eurozone
1. Here we go again …
Source: Reuters Read full article
The euro weakened in response to the news from Italy.
Source: barchart.com
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2. Italian industrial output deteriorated in November.
However, industrial production has almost recovered at the Eurozone level.
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3. French industrial sentiment remains stable.
4. At the current rate of vaccinations, the Eurozone won’t reach herd immunity until 2023.
Source: Pantheon Macroeconomics
5. Industrials have outperformed financials over the past few years, which is typically a positive for the German DAX relative to the Stoxx 50 index.
Source: BCA Research
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Europe
1. Let’s start with Sweden’s government budget balance.
2. Poland’s exports are up nearly 10% from a year ago.
3. Czech retail sales tumbled in November.
4. This chart shows the reliance on job retention schemes.
Source: Capital Economics
5. What percentage of the GDP do Europeans spend on healthcare?
Source: @WSJ Read full article
6. Which countries have been hit the hardest by the pandemic (in terms of the number of deaths)?
Source: Milos Popovic
7. Europe has been the largest beneficiary of ESG fund flows.
Source: @WSJ Read full article
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Japan
1. Machine tool orders remained robust last month.
2. Tokyo office vacancies continue to grind higher.
3. The stock market is surging.
Unlike in other developed markets, Japan’s small-caps are underperforming.
h/t @shoko_oda
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4. Electricity prices have been soaring.
Source: @financialtimes Read full article
Source: Statista
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China
1. The trade surplus hit a record high, …
… as exports climb.
Source: @markets Read full article
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2. The PBoC has been injecting liquidity, which helped power credit expansion and the stock market. It’s a positive trend for emerging markets.
Source: CrossBorder Capital, @johnauthers, @bopinion Read full article
3. The CSI 300 and the Shanghai Composite indices have diverged sharply (the Shanghai Composite has more “old economy” and financial stocks).
Source: @DavidInglesTV
4. China’s 10yr yield spread vs. the US has peaked.
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Emerging Markets
1. Brazilian bond yields are rising on concerns that the central bank may shift to a more hawkish posture.
Separately Brazil’s service sector continues to recover.
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2. The Chilean peso tumbled.
Bloomberg: – Chile’s central bank announced Wednesday that it plans to boost its foreign reserves, buying $40 million a day for more than a year until its holdings reach 18% of gross domestic product.
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3. Israel’s trade deficit hit a record.
4. Turkey’s industrial production is 11% above last year’s levels.
5. Higher commodity prices bode well for commodity exporters.
Source: Morgan Stanley Research
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Cryptocurrency
1. Bitcoin is headed toward $40k again.
2. The mother of all bubbles?
Source: BofA Global Research, @jessefelder Read full article
3. The 60-day correlation between Bitcoin and gold turned negative for the first time in over a year.
Source: @CoinDeskData
4. Here is the open interest in CME Bitcoin futures.
Source: @WSJ Read full article
5. This table shows how far various cryptocurrencies are from all-time-highs. Smaller cryptocurrencies have a long way to go, while BTC and ETH have been in retreat.
Source: @CoinDeskData
6. Investors have been well compensated for higher volatility in ETH vs. BTC given its outperformance. On the other hand, downside volatility in XRP has been a significant risk.
Source: @CoinDeskData
7. Below is a visualization of the top 1000 cryptocurrencies (market cap).
Source: @chartrdaily
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Commodities
1. Gold is at support.
Source: barchart.com
2. Battery prices have declined significantly over the past decade but are now reversing, as vehicle demand outstrips supply.
Source: Fitch Solutions Macro Research
Source: Citi Research, @Scutty
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Equities
1. Defensive shares outperformed on Wednesday, boosted by higher Treasury prices.
• Utilities:
• REITs:
Here are a couple of other sector charts.
• Housing:
• Semiconductors:
Source: Reuters Read full article
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2. The composition of the momentum factor is shifting toward more cyclical sectors.
Source: Evercore, @markets Read full article
3. Tech represents a relatively small slice of the GDP and employment but is the largest component of the S&P 500.
Source: DoubleLine, @JuliaLaRoche
4. This chart shows the ratio of the top five S&P 500 members to the rest of the index vs. Treasury yields.
Source: Anastasios Avgeriou, BCA Research
5. Tech M&A volume continues to climb.
Source: S&P Global Market Intelligence
6. 2020 was a good year for SPAC mergers.
Source: @WSJ Read full article
7. Net foreign purchases of US equities have surged over the past year.
Source: BCA Research
8. Here are the gold-to-S&P 500 and Treasuries-to-S&P 500 ratios.
Source: @allstarcharts
9. While most Investopedia readers (mostly retail investors) still expect significant returns this year, there was an increase among those who expect a market downturn compared to December.
Source: Investopedia Read full article
10. Speculators are increasingly chasing penny stocks.
Source: @markets Read full article
11. What could be a potential catalyst to halt the current rally? Here is one possibility.
Source: @markets Read full article
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Rates
1. Investors now expect the Fed to hike rates in late 2023.
Source: Capital Economics
2. The ratio in swaption premiums for a +25 or -25 basis point shift in 30-year rates shows no bias toward higher or lower rates over the next year.
Source: Arbor Research & Trading
Swaption volatility remains extremely low, which suggests investors are not fearful of rising yields.
Source: Arbor Research & Trading
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3. This chart shows moves in US real and nominal yields since late July.
Source: Morgan Stanley Research
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Global Developments
1. Here are the Capital Economics mobility trackers.
Source: Capital Economics
2. According to a World Bank survey, “firms thus far have been more likely to reduce hours or wages than fire workers.”
Source: World Bank Read full article
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Food for Thought
1. The world’s biggest shipping hubs:
Source: Statista
2. Investing in warehouses vs. offices:
Source: @markets Read full article
3. The share of workers who quit their job, by sector:
Source: @jeffsparshott
4. Seated restaurant diners in the US vs. Australia:
Source: Longview Economics
5. Demand for vaccine:
Source: Ipsos Read full article
Percent vaccinated (updated):
Source: Statista
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6. Native vs. foreign-born workers in STEM and non-STEM occupations:
Source: St. Louis Fed Read full article
7. US consumer sentiment by party affiliation:
Source: Morning Consult Read full article
8. Capitol police budget:
Source: Cato Institute
9. Tallest flagpoles:
Source: Statista
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