Posted on by The Daily Shot Editor: Lev Borodovsky

Last year’s new home sales were the highest since 2006

The Daily Shot: 29-Jan-21
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Japan
• Asia – Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Equities
• Credit
• Rates
• Food for Thought

 

The United States

1. The fourth-quarter GDP growth was roughly in line with market consensus (4% annualized).
 
Source: @jeffsparshott, @greg_ip  
 
• Here are the components.
 

 
• Consumption was a bit softer than expected.
 

 
• But business investment continued to strengthen.
 

 
Here are the trends (PCE = personal consumption expenditures).
 
Source: JP Morgan, @carlquintanilla  
 
• Residential and nonresidential investment trends diverged.
 
Source: @jeffsparshott, @greg_ip  
 
• The increase in US trade deficit was a drag on growth again (imports outpaced exports).
 

 
• Here is a comparison to the post-2008 recovery.
 
Source: Mizuho Securities USA  
 
• The GDP rebound massively outpaced job gains.
 
Source: @TCosterg  
 
• The nation’s output gap remains wide.
 
Source: Mizuho Securities USA  
 
• The money supply expansion has dramatically outpaced the nominal GDP growth (low velocity of money).
 
Source: @TCosterg  

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2. New home sales narrowed the gap with 2019 in December.
 

 
• Inventories of new homes climbed but were still relatively low last month.
 

 
• On an annual basis, home sales hit the highest level since 2006.
 

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3. The Kansas City Fed’s regional manufacturing index showed a further acceleration in factory activity this month.
 

 
• Expectations of future production strengthened.
 

 
• Input prices soared.
 

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4. Next, we have some updates on inflation.
 
• Services inflation:
 
Source: Alpine Macro  
 
• The share of CPI subcomponents rising faster than 3%:
 
Source: Longview Economics  
 
• A pullback in wage indicators:
 
Source: Arbor Research & Trading  

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5. Bloomberg’s consumer sentiment index ticked higher.
 

 
The improvement was driven by Democrats and Independents, as confidence among Republicans deteriorated further.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
This divergence is supported by other surveys.
 
• Gallup:
 
Source: Gallup   Read full article  
 
• Morning Consult:
 
Source: Morning Consult  

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6. Business and consumer confidence indicators have diverged.
 
Source: @BittelJulien  
 
7. Initial jobless claims remain well above one million new applications per week.
 
Source: Oxford Economics  
 
8. COVID hospitalizations continue to decline.
 
Source: CovidTracking.com   

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Canada

1. November retail sales were stronger than expected.
 

 
2. The CFIB small and medium-size business index ticked higher this month.
 

 
However, the recovery has been uneven, with many sectors still struggling.
 

 
Here are some trends from the report.
 
• Staffing:
 
Source: Scotiabank Economics  
 
• Capacity utilization:
 
Source: Scotiabank Economics  
 
• Business conditions:
 
Source: Scotiabank Economics  

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The United Kingdom

1. The Lloyds Business Barometer remains in contraction territory.
 

 
2. Transportation metrics are still soft.
 
Source: Pantheon Macroeconomics  
 
3. Here is the change in employment status between last February and November.
 
Source: @nyecominetti, @resfoundation  
 
4. New COVID cases are falling.
 
Source: @jeffsparshott  

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The Eurozone

1. Germany’s CPI spiked this month. This was mostly due to the reversal of the 2020 VAT reduction. However, higher energy prices and the new carbon tax also boosted the price gauge.
 

 
Softer rent inflation will be putting downward pressure on the CPI.
 
Source: Pantheon Macroeconomics  

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2. Next, we have some sentiment indicators.
 
• Italian consumer confidence:
 

 
• Eurozone services confidence:
 

 
• Eurozone manufacturing confidence:
 

 
• Eurozone economic confidence (business + consumer):
 

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Europe

1. Here are some updates on Sweden.
 
• Consumer and manufacturing confidence (ongoing improvements):
 

 
• December retail sales:
 

 
• The unemployment rate (an increase in December):
 

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2. This chart shows electricity generation in the EU from fossil fuels, nuclear reactors, and renewables.
 
Source: @_HannahRitchie, @OurWorldInData, @EmberClimate  

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Japan

1. Industrial production remains soft.
 

 
2. Employment shows signs of improvement.
 
• The unemployment rate:
 

 
• Jobs-to-applicants ratio:
 

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3. Tokyo’s consumer inflation jumped this month (this will show up in the national figures).
 

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Asia – Pacific

1. South Korea’s December industrial production surprised to the upside.
 

 
2. Asian exports are now well above pre-COVID levels.
 
Source: Morgan Stanley Research  
 
Business investment should follow.
 
Source: Morgan Stanley Research  

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3. New Zealand’s consumer confidence continues to recover.
 

 
Separately, the New Zealand dollar has been correlated with inflation-sensitive assets.
 
Source: ANZ Research  

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4. Australia’s private-sector credit appears to have bottomed.
 

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China

1. Short-term rates keep climbing. This is certainly one way to delever the financial system.
 

 
Here is the 10yr yield vs. the overnight rate.
 
Source: @BloombergQuint   Read full article  
 
Even the offshore yuan rate jumped.
 

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2. China has experienced unprecedented outperformance in exports versus the rest of the world.
 
Source: Gavekal Research  
 
But trade surplus is expected to moderate.
 
Source: Pantheon Macroeconomics  

——————–

 
3. Here is a projection for China’s population growth vs. the US.
 
Source: @WSJ   Read full article  

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Emerging Markets

1. Let’s begin with Russia.
 
• Retail sales:
 

 
• Wage growth:
 

 
• The unemployment rate:
 

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2. Here are some updates on Vietnam.
 
• Export growth:
 

 
• Retail sales:
 

 
• Inflation:
 

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3. Indonesia’s coronavirus cases have accelerated.
 
Source: Statista  
 
4. The Philippine stock market is rolling over.
 
Source: @markets   Read full article  
 
5. Iran’s inflation remains near the highs.
 
Source: TS Lombard  

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Cryptocurrency

Bitcoin is at resistance.
 

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Commodities

1. Deprived of their favorite stocks, the Reddit crowd went after silver.
 
Source: @WSJ   Read full article  
 

 
Call option vol spiked (yes, they are using options in this market as well).
 

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2. China’s coal prices have been rolling over.
 

 
3. This chart shows China’s corn consumption.
 
Source: TS Lombard  
 
4. The August 2020 La Niña cycle was a stand-out for grains.
 
Source: Arbor Research & Trading  

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Equities

1. Stocks bounced on Thursday, but futures are down in early trading.
 

 
2. Concerned about out-of-control growth in unsettled securities and a rising risk of a dramatic price gap, clearing firms boosted margin requirements for online brokers in many of the high-flying stocks.
 
Source: @markets   Read full article  
 
Source: @WSJ   Read full article  
 
• As a result, brokers imposed trading limits.
 
Source: @WSJ   Read full article  
 
• The Reddit favorites sold off sharply.
 

 
• To cover the new margin requirements, Robinhood tapped its bank credit lines.
 
Source: @markets   Read full article  
 
Source: @markets   Read full article  
 
With Robinhood ready to resume trading, these stocks jumped sharply in after-hours trading.
 
Source: CNBC  

——————–

 
3. Trading volumes spiked this week.
 
Source: @financialtimes, h/t @ISABELNET_SA   Read full article  
 
Source: @JLyonsFundMgmt  

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4. VIX has diverged from the 30-day historical volatility.
 
h/t @EddBolingbroke  
 
5. How does the US market perform under new presidents?
 
Source: LPL Research  

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Credit

This chart shows CCC corporate bond spreads with and without the energy sector.
 
Source: CreditSights  

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Rates

1. The US 3-month LIBOR is near the lows amid ample liquidity in money markets.
 

 
2. The unprecedented growth in money supply suggests a steeper US yield curve. 
 
Source: Longview Economics  
 
3. The uptrend from 2018 in 10-year Treasury bond futures is starting to reverse.
 
Source: Longview Economics  
 
4. What factors will signal a Fed liftoff?
 
Source: BCA Research  

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Food for Thought

1. Apple revenues by business:
 
Source: @financialtimes   Read full article  
 
Apple market value ($2.4 trillion):
 
Source: @axios   Read full article  

——————–

 
2. Long-term unemployment in the US:
 
Source: @markets   Read full article  
 
3. Voter turnout by state:
 
Source: @johngramlich   Read full article  
 
4. Share of personal savings by income category:
 
Source: @denitsa_tsekova, @OxfordEconomics   Read full article  
 
5. How Americans decide how much money to save:
 
Source: MagnifyMoney   Read full article  
 
6. US jobs recovery:
 
Source: Moody’s Analytics  
 
7. Views on marriage in the US:
 
Source: Gallup   Read full article  
 
8. Super Bowl appearances and wins for NFL quarterbacks:
 
Source: Statista  
 
Super Bowl ticket prices on the secondary market:
 
Source: Statista  

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Have a great weekend!

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