The Daily Shot: 12-Feb-21
• Equities
• Credit
• Rates
• Commodities
• Cryptocurrency
• Emerging Markets
• The Eurozone
• The United Kingdom
• The United States
• Global Developments
• Food for Thought
Equities
1. S&P 500 earnings have been more correlated with global rather than US GDP.
Source: @ISABELNET_SA, @BofAML
2. Longer-term estimates of US earnings per share (based on the MSCI US Index) have seen an unprecedented spike.
Source: @BittelJulien
3. The most liquid US ETFs (SPY, QQQ, and IWM) have been gapping up at the open more frequently than ever before.
Source: @sentimentrader
4. The number of companies providing earnings guidance has been the smallest in 20 years.
Source: BofA Global Research, @WallStJesus
5. Boosted by the retail trading frenzy, the total US trading volume is nearing its pandemic peak.
Source: @markets Read full article
6. The cyclical/defensive sector ratio is approaching the dot-com-bubble high.
7. Regulators are now all over the Reddit “pump & dump” activity.
Source: @WSJ Read full article
8. The Nasdaq OTC trading volume spiked in recent weeks. These are the riskiest companies because they do not meet the minimum listing standards (many have been delisted).
9. The put-call ratio continues to hit multi-year lows.
10. Here is an illustration of a market bubble’s life cycle.
Source: TS Lombard
11. During the 2013 taper-tantrum, the S&P 500 – 10yr Treasury yield correlation became negative (an indicator worth monitoring).
Source: Goldman Sachs
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Credit
1. This chart shows the US corporate bond market cap by rating.
Source: Mizuho Securities USA
And here is the US high-yield and investment-grade duration over time.
Source: Mizuho Securities USA
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2. The market is pricing in less bankruptcy risk ahead.
Source: Arbor Research & Trading
3. Foreign banks have been tapping the US commercial paper market. Unlike their US counterparts, foreign banks typically don’t have access to US dollar deposits. Given the massive spike in money-market fund AUM last year, there is plenty of demand for short-term paper.
4. Yields on junk US muni bonds are nearing pre-COVID lows.
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Rates
1. Both the 10-year and 30-year Treasury yields remain above their 200-day moving average.
Source: BCA Research
2. The 10-year TIPS yield has diverged from the implied S&P 500 long-term earnings growth rate.
Source: BCA Research
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Commodities
1. The LME industrial metals index is at the highest level since 2012.
2. Copper usage in emerging markets has further room to grow.
Source: Alpine Macro
• New copper discoveries have dwindled.
Source: Alpine Macro
• Alpine Macro expects copper demand to triple in the next 30-years, far outpacing supply.
Source: Alpine Macro
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Cryptocurrency
1. Crypto investors continue to enjoy a streak of positive news.
Source: @WSJ Read full article
Source: The Hill Read full article
Bitcoin is pushing toward $50k.
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2. Much of the rally in Bitcoin has taken place during US hours. However, the Asia contribution has picked up recently.
Source: Morgan Stanley Research; Octavian Adrian Tanase
3. These charts show Bitcoin’s correlation with gold and the US dollar.
Source: Morgan Stanley Research; Octavian Adrian Tanase
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Emerging Markets
1. Let’s begin with Mexico.
• Banxico cut rates as expected, …
… and more easing is on the way this year (red line).
Source: Scotiabank Economics
• Slow vaccination rollout and elevated new COVID cases remain a concern.
Source: Morgan Stanley Research
• December manufacturing output surprised to the upside.
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2. South Africa’s mining output has rebounded, topping forecasts.
3. Russia’s exports are gradually recovering.
4. Israel’s trade deficit hit a new high.
5. Lebanon’s hyperinflation continues to worsen.
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The Eurozone
1. Things are looking up for Mario Draghi.
Source: CNBC Read full article
• The Italian 10yr bond yield dipped below 0.5% for the first time.
And the spread to Germany is now tightest in years.
A 100-year Italian bond would yield 2.5%, according to Saxo Bank. Time for Draghi to hit that bid?
Source: @markets Read full article
• Separately, Italian GDP per capita has been increasingly lagging that of Spain.
Source: BCA Research
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2. As we saw in the Ifo report last month, German businesses are uneasy about growth in the months ahead.
Source: The Daily Feather
3. Eurozone consumers expect savings to remain elevated.
Source: TS Lombard
4. The gap between the US and Eurozone market-based inflation expectations has widened.
Source: TS Lombard
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The United Kingdom
1. The housing market paused last month.
2. Transportation indicators remain depressed.
Source: Pantheon Macroeconomics
3. When will the UK hit its vaccination targets?
Source: Statista
4. Amsterdam has overtaken London as Europe’s largest share trading center.
Source: Bloomberg Read full article
5. This chart shows the number of ships visiting UK ports.
Source: Longview Economics
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The United States
1. Initial jobless claims declined last week but are holding above one million.
Source: Oxford Economics
Continuing claims are increasingly dominated by federal emergency programs.
Source: Bloomberg Read full article
Source: Oxford Economics
Many economists expect new claims to keep tapering in the weeks ahead.
Source: Pantheon Macroeconomics
The Homebase small business employment index shows stabilization.
Source: Pantheon Macroeconomics
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2. The NY Fed’s activity index has deteriorated in recent weeks.
But the drop in new COVID cases should reverse this trend.
Source: Morgan Stanley Research
A faster pace of vaccinations should help.
Source: @WHCOVIDResponse
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3. Next, we have some updates on housing.
• Mortgage delinquencies slowed last quarter.
Helped by mortgage forbearance programs and housing market strength, the foreclosure rate shows no signs of last year’s massive job loss.
• Here is the nation’s home price appreciation by population density.
Source: Morgan Stanley Research
• Moratoriums have kept rental evictions from spiking.
Source: @citylab, @kristoncapps Read full article
• Asking rental prices point to higher rent inflation ahead (2 charts).
Source: @inflation_guy
Source: Pantheon Macroeconomics
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4. Finally, let’s take a look at the proposed fiscal stimulus package.
• Dollars allocated per person, by category:
Source: @BCAppelbaum; The New York Times Read full article
• The impact on the GDP:
Source: The Hamilton Project, h/t @jsblokland Read full article
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Global Developments
1. The average implied volatility across commodities rose over the past few months, while credit volatility continued to sink.
Source: Arbor Research & Trading
2. Corporate debt-to-profit ratios in advanced economies remain below 2008 levels.
Source: Capital Economics
3. The US dollar tends to weaken when global GDP growth outpaces that of the US.
Source: Morgan Stanley Research
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Food for Thought
1. Declines in credit card balances by state:
Source: @howmuch_net Read full article
2. Comparing the stimulus checks:
Source: Bloomberg Read full article
3. The Wall Street – Main Street disconnect:
Source: BofA Global Research, @WallStJesus
4. US CPI by decade:
Source: @markets Read full article
5. Marriages in 2020:
Source: @business Read full article
6. State population changes over the past decade:
Source: @WSJ Read full article
7. US geographic mobility:
Source: The Economist Read full article
8. How long American diplomats spend studying different languages:
Source: Quartz Read full article
9. Ph.D. percentages by country:
Source: @BloombergQuint Read full article
10. The new COVID variants:
Source: Statista
11. Control of Africa in 1880 and 1913:
Source: Wikimedia Commons
12. Food specialties of each region in Italy:
Source: Travel Supermarket
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Have a great weekend!
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