Posted on by The Daily Shot Editor: Lev Borodovsky

Hong Kong’s stock market under pressure from transaction tax hike

The Daily Shot: 24-Feb-21
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Alternatives
• Rates
• The United States
• The United Kingdom
• Europe
• Asia – Pacific
• Global Developments
• Food for Thought

 

China

1. Hong Kong announced an increase in stamp duty on stock trades, sending shares sharply lower.
 
Source: Fortune   Read full article  
 
• The exchange operator stock price:
 

 
• The overall stock index:
 

 
• Mainland stocks sold off as well (pulled lower by Moutai – see story).
 

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2. China’s consumer spending was strong during the Lunar New Year holidays (LNY).
 
Source: BofA Global Research, James W.  
 
Box office sales jumped.
 
Source: Barclays Research  
 
But railway traffic was significantly lower due to travel restrictions under the “stay local for Lunar New Year” policy.
 
Source: Barclays Research  

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3. The next two charts show China’s market share of global manufacturing and exports.
 
Source: Gavekal Research  
 
4. Beijing says that it almost eradicated extreme rural poverty.
 
Source: @financialtimes   Read full article  
 
5. The nation’s birth rate continues to decline.
 
Source: Sixth Tone   Read full article  
 
The population is aging.
 
Source: Sixth Tone   Read full article  

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6. It will take time to get gamblers back to Macau.
 

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Emerging Markets

1. ANZ projects a significant increase in India’s debt-to-GDP ratio.
 
Source: ANZ Research  
 
2. The Vietnamese dong has been weakening over the past few days.
 

 
3. Next, we have some updates on North Korea (from Fitch Solutions).
 
• Trade with China:
 
Source: Fitch Solutions Macro Research  
 
• Growth projections:
 
Source: Fitch Solutions Macro Research  
 
• Government revenues:
 
Source: Fitch Solutions Macro Research  

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4. According to the IMF, “inflation declined across most EMs post the COVID shock but has remained within the target for most…”
 
Source: IMF  
 
Here is the EM inflation cycle:
 
Source: IMF  

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Cryptocurrency

1. Bitcoin volume is at the highest level since the January 11th correction.
 
Source: @CoinDeskData  
 
2. Etherium (ETH) experienced a flash crash on Monday, which coincided with a surge in trading volume. This was not the first time.
 

 
Source: CoinDesk   Read full article  

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3. ETH put-call skew has been rising over the past few months, signaling greater downside protection demand.
 
Source: @CoinDeskData  

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Commodities

1. Arabica coffee futures hit the highest level since 2017.
 

 
2. Many countries are trying to reduce their dependence on China for rare earths.
 
Source: Bloomberg   Read full article  
 
3. Next, we have some data on lithium production.
 
Source: @reillybrennan, @SPGlobal  

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Energy

1. Utility customers and taxpayers in Texas will be paying this bill for some time.
 
Source: @WSJ   Read full article  
 
2. This chart shows the oil production trajectories in Brazil and Venezuela.
 
Source: @axios   Read full article  

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Equities

1. Jerome Powell reassured the markets that QE would continue for some time. Tech stocks reversed their downward trend.
 

 
The Nasdaq 100 held support at the 50-day moving average.
 
h/t Sophie Caronello   

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2. It’s been a tough month for growth stocks.
 
Source: Bloomberg   Read full article  
 
Value outperformed growth in most markets this year.
 
Source: S&P Global Market Intelligence  

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3. Here is the US market performance across the capitalization spectrum.
 
Source: S&P Global Market Intelligence  
 
4. The most-shorted stocks are down nearly 10% over the past five business days.
 

 
5. Tesla has been a drag on the S&P 500 and the consumer discretionary sector in particular.
 

 
6. Stock rallies generally paused or reversed during previous periods of rising Treasury yields.
 
Source: Anastasios Avgeriou  
 
7. The Buffett Indicator (ratio of US market capitalization to US GDP) shows extreme valuations for US shares. However, many US-based multinational firms are growing due to economic expansion outside of the US.
 
Source: @jessefelder   Read full article  
 
8. 54% of S&P 500 companies pay a dividend greater than the 10-year Treasury yield. 
 
Source: Daniel Moskowits  
 
9. SPAC issuance reached 68% of the IPO market.
 
Source: Jack Ablin, Cresset Wealth Advisors  
 
10. Sustainable funds’ asset growth has been remarkable.
 
Source: LPL Research  

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Alternatives

1. Hedge funds’ corporate activism has been rising.
 
Source: CreditSights  
 
2. ETF ownership of private equity firms has room to increase.
 
Source: Paul Gulberg   Read full article  
 
3. Private equity investors get paid for giving up liquidity (in addition to holding leveraged firms).
 
Source: The Economist   Read full article  

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Rates

1. The 30yr-5yr Treasury spread, the yield curve slope at the longer end, is now the widest since 2014.
 

 
2. Is the increase in Treasury volatility over?
 
Source: Arbor Research & Trading  
 
3. Treasury term premium keeps climbing.
 

 
4. Foreigners now hold more Treasury bills than notes and bonds.
 
Source: Oxford Economics  

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The United States

1. According to the the Conference Board, consumer confidence ticked higher this month as the pandemic situation improves.
 

 
• The Conference Board’s labor differential (“jobs plentiful” less “jobs hard to get”) remains depressed. This is the main reason the Fed wants to keep QE going.
 

 
Here is the “jobs hard to get” indicator vs. the unemployment rate.
 
Source: Mizuho Securities USA  
 
• Inflation expectations remain elevated, driven by food prices (2nd chart).
 

 
Source: Pantheon Macroeconomics  

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2. Nomura has upgraded its forecast for the core PCE inflation, the Fed’s preferred measure.
 
Source: Nomura Securities  
 
3. Home price appreciation (based on Case-Shiller) exceeded 10% in December (year-over-year).
 

 
A similar index from the FHFA rose by more than 11% – a record high.
 

 
The gap between wages and home prices continues to widen.
 

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4. The Richmond Fed’s manufacturing report shows robust activity in the region.
 

 
However, the index of expected new orders slumped this year.
 

 
• Logistics bottlenecks continue to plague manufacturers (which is not unique to the US).
 

 
• Factories are having a tough time finding qualified workers.
 

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5. The Philly Fed’s regional service-sector report showed stabilization.
 

 
• Companies (particularly retailers) have rebuilt inventories.
 

 
• Part-time hiring has been improving, with full-time openings lagging.
 

 
• Many service firms are having difficulties passing on higher costs to their customers.
 

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6. The US leading indicator recovery period has been the shortest on record.
 
Source: Evercore ISI  

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The United Kingdom

1. Bond yields and the pound keep moving higher (3 charts).
 

 

 

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2. The CBI report continues to show weakness in retail sales.
 

 
3. The unemployment rate is above 5% for the first time since 2016.
 

 
• Below is the number of furloughed workers, …
 
Source: ING  
 
… and the breakdown by sector.
 
Source: ING  
 
• Survey data point to layoffs coming to an end (on a net basis).
 
Source: Pantheon Macroeconomics  
 
• Here is the number of vacancies.
 
Source: @resfoundation  

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4. Q1 is a tough quarter for the UK.
 
Source: @financialtimes   Read full article  

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Europe

1. Germany’s Q4 GDP was adjusted higher.
 

 
2. Italian industrial orders accelerated going into the year-end.
 

 
3. Sweden’s inflation strengthened last month (similar to the Eurozone).
 

 
4. Poland’s retail sales tumbled in January.
 

 
5. The Swiss franc has been falling vs. the euro.
 

 
6. European Covid-related deaths were higher in the second wave, driven by Central and Eastern Europe.
 
Source: The Economist   Read full article  

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Asia – Pacific

1. Taiwan is forecasting the strongest GDP growth since 2014.
 
Source: @markets   Read full article  
 
2. Singapore remains in deflation.
 

 
3. South Korea’s business surveys show further improvement this month.
 

 
4. The Kiwi dollar keeps climbing.
 

 
5. Australia’s wage costs rebounded in Q4.
 

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Global Developments

1. Let’s take a look at some shipping data.
 
• Container freight costs (2 charts):
 
Source: @markets   Read full article  
 
Source: @WSJ   Read full article  
 
• Materials for packaging:
 
Source: Morgan Stanley Research, Gustavo Fuhr  
 
• Shipping capacity:
 
Source: Fitch Ratings  

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2. PMI indicators show supply disruptions pushing up prices.
 
Source: Capital Economics  
 
3. Here is a look at fiscal deficits.
 
Source: IIF  

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Food for Thought

1. Podcast ad revenue:
 
Source: eMarketer    Read full article  
 
2. Couples meeting online (2 charts):
 
Source: @chartrdaily  
 
Source: Statista  

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3. Women in the United States Congress:
 
Source: Pew Research Center   Read full article  
 
4. Which generation controls the Senate?
 
Source: r/dataisbeautiful  
 
5. Changes in electoral votes since 1948:
 
Source: reddit  
 
6. COVID cases in US nursing homes:
 
Source: @axios   Read full article  
 
7. Percent of the population sick vs. household income in LA:
 
Source: Kinsa   Read full article  
 
8. Pandemics vs. social unrest:
 
Source: IIF   Read full article  
 
9. Correction: The previous chart we had on coups in Latin America was misleading. Here is the correct one.
 
Source: r/dataisbeautiful  
 
10. Inter-Korean dialogue:
 
Source: Statista  
 
11. The Nile basin:
 
Source: UN  

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