Who is the new retail investor?

The Daily Shot: 03-Mar-21
Equities
Credit
Rates
Commodities
Emerging Markets
China
Asia – Pacific
The Eurozone
The United Kingdom
Canada
The United States
Global Developments
Food for Thought



 

Equities

1. The stock market is vulnerable to an increase in real rates as the S&P 500 – TIPS yield correlation moves further into negative territory.
 
h/t Cormac Mullen   
 
2. Market performance tends to be poor when the 10yr Treasury yield climbs by more than two standard deviations in a month.
 
Source: Goldman Sachs; @Godblsmnymkr  
 
3. Corporate cash balances are hitting new highs.
 
Source: @ISABELNET_SA, @MorganStanley  
 
4. ETF inflows have been impressive.
 
Source: SPDR Americas Research, @mattbartolini  
 
Inflows to value ETFs were especially strong.
 
Source: SPDR Americas Research, @mattbartolini  

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5. Next, we have some sector trends.
 
Energy and financial stocks have been recovering relative to the S&P 500.
 
Source: Alpine Macro  
 
Inflows to energy and financial ETFs have risen this year.
 
Source: SPDR Americas Research, @mattbartolini  
 
Tech sector’s underperformance vs. financials looks overextended.
 
Source: Longview Economics  
 
Travel and entertainment stocks have outperformed sharply in recent days.
 

 
Regional banks lagged the overall banking sector on Tuesday.
 

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6. The Reddit crowd picked a new short-squeeze victim.
 
Source: Benzinga   Read full article  
 
Source: @axios   Read full article  

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7. Online search activity points to continuing rapid growth in retail trading.
 
Source: Arbor Research & Trading  
 
Retail-driven trading volumes keep climbing.
 
Source: Deutsche Bank Research  
 
And option trading volumes are near records.
 
Source: Henry Schwartz  

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8. Retail investors have changed market dynamics over the past 12 months. But who is the new retail investor? Below we have some data from Deutsche Bank.
 
Brought in by stimulus checks:
 
Source: Deutsche Bank Research  
 
Younger and less experienced:
 
Source: Deutsche Bank Research  
 
Relying on social media:
 
Source: Deutsche Bank Research  
 
Jumping into options trading:
 
Source: Deutsche Bank Research  
 
Using leverage:
 
Source: Deutsche Bank Research  
 
Planning to keep going:
 
Source: Deutsche Bank Research  


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Credit

1. Global high-yield held up well last month.
 
Source: Oxford Economics  
 
2. Loan loss provisions among large US banks are below pre-crisis levels but are still high as a percent of total loans. This means banks have extra balance sheet capacity.
 
Source: Longview Economics  
 
3. For now, US corporate bankruptcy filings remain near record lows.
 
Source: Longview Economics  
 
4. Leveraged loan repricing volume soared as issuers return to the market to reduce borrowing costs on existing debt. Most credits being repriced were originated before the pandemic, according to S&P. 
 
Source: S&P Global Market Intelligence  
 
Roughly 80% of leveraged loan repricing this year is from lower-rated, single-B issuers.
 
Source: S&P Global Market Intelligence  

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5. Euro-denominated leveraged finance issuance has accelerated.
 
Source: @lcdnews, @millarlr  
 
6. Lodging and retail commercial mortgages have the highest delinquency rates.
 
Source: @markets   Read full article  


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Rates

1. Rate implied volatility dropped sharply on Tuesday.
 

 
2. Real yields have barely begun to reflect a significant pick-up in economic growth, according to Oxford Economics.
 
Source: Oxford Economics  
 
3. The US experienced the largest bond outflows on record on a rolling 12-month basis.
 
Source: BCA Research  
 
4. The 5yr, 5yr forward nominal Treasury yield is back at the Fed’s longer-term policy rate projection.
 
Source: BCA Research  
 
5. Questions are being raised about the sharp deterioration in liquidity during the latest selloff in Treasuries.
 
Source: Bloomberg   Read full article  


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Commodities

1. Steel prices in Shanghai are soaring.
 

 
2. Silver held support.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
3. CTAs have reduced their exposure to gold given the precious metal’s recent downtrend.
 
Source: Deutsche Bank Research  
 
Is there more downside for gold due to the recent increase in the 5yr, 5yr forward real yield?
 
Source: Anastasios Avgeriou, BCA Research  

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4. Got milk? Whole milk futures soared in New Zealand.
 
Source: NewsHub   Read full article  
 


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Emerging Markets

1. India’s service-sector growth strengthened last month.
 

 
2. Turkish inflation keeps grinding higher, with the core CPI now above 16%.
 

 
3. Credit contraction in the Philippines continues.
 

 
4. Brazil’s producer prices have soared over the past 12 months.
 

 
5. Are Mexican stocks cheap relative to Brazil?
 
Source: BCA Research  


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China

1. As discussed earlier, business activity lost some momentum over the past couple of months.
 

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2. The renminbi’s outperformance has been impressive.
 
Source: Gavekal Research  
 
But the currency is not overvalued, according to BCA Research.
 
Source: BCA Research  

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3. Danske Bank expects the stimulus-supported recovery to fade this year, driven by a decline in China’s credit impulse. 
 
Source: Danske Bank  


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Asia – Pacific

1. Singapore’s business activity has accelerated.
 

 
2. Taiwan’s money supply is growing at the fastest pace in decades.
 

 
3. A housing bubble in New Zealand?
 

 
4. Australia’s Q4 GDP growth surprised to the upside, driven by consumer spending.
 

 
Source: ANZ Research  


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The Eurozone

1. Inflation has recovered this year.
 

 
And we should see further gains in inflation in the months ahead (due to higher energy prices and base effects).
 
Source: Pantheon Macroeconomics  
 
Consumers expect higher inflation as well.
 
Source: Desjardins  

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2. We had some disappointing data from Germany.
 
Retail sales tumbled in January (due to weather and lockdowns).
 
Source: Reuters   Read full article  
 

 
Unemployment unexpectedly jumped last month.
 

 
Here is the total of unemployed and “short-time” workers.
 
Source: Commerzbank Research  

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3. Spain’s unemployment rate has been climbing.
 
Source: @financialtimes   Read full article  
 
4. Portugal’s industrial production deteriorated further in January.
 

 
5. Dublin is the destination of choice for finance firms leaving the UK.
 
Source: EM Phil Loans   Read full article  


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The United Kingdom

1. The number of furloughed workers hit 4 million in January.
 
Source: Barclays Research  
 
The government will keep the program in place until the end of September.
 
Source: Evening Standard   Read full article  

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2. Household deposits spiked over the past 12 months.
 
Source: BCA Research   Read full article  


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Canada

The Q4 GDP growth exceeded market forecasts.
 

 
Here are the contributions.
 
Source: Scotiabank Economics  


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The United States

1. Auto sales softened last month.
 

 
2. Consumers continue to lose interest in borrowing.
 
Source: Arbor Research & Trading  
 
3. Auto loan delinquencies have been rising.
 
Source: BCA Research  
 
4. Homebase small business data suggest that hiring is rebounding.
 
Source: Pantheon Macroeconomics  
 
5. Which sectors drove the spike in imports last year?
 
Source: S&P Global Market Intelligence  
 
6. The Atlanta Fed’s GDPNow model is tracking 10% growth (annualized) in the current quarter.
 
Source: Atlanta Fed  
 
Depending on the stimulus size, “Bidenomics” could soon push the GDP above the pre-COVID trend. Below are a couple of scenarios.
 
Oxford Economics:
 
Source: Oxford Economics  
 
Deutsche Bank:
 
Source: Deutsche Bank Research  

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7. The COVID situation improvement has been impressive. Here is the change over the past couple of months.
 
Source: @carlquintanilla, @COVID19Tracking  


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Global Developments

1. The shadow rate differential between the Fed and the ECB points to further weakness for the US dollar.
 
Source: Arbor Research & Trading  
 
2. Are global exports about to accelerate?
 
Source: Pictet Wealth Management  


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Food for Thought

1. US cigarette sales stopped declining last year.
 
Source: @WSJ   Read full article  
 
2. Concerns about the budget deficit, by age:
 
Source: The Washington Post   Read full article  
 
3. US government spending vs. revenues:
 
Source: SRP, @Schuldensuehner  
 
4. Politically-driven divergence in consumer sentiment:
 
Source: The Daily Feather  
 
5. Popularity of select bills and executive actions:
 
Source: The Economist   Read full article  
 
6. Trust in government:
 
Source: Statista  
 
7. Ocean garbage patches:
 
Source: NOAA   Read full article  
 
8. Emissions from agriculture:
 
Source: Making Better Policies for Food Systems   Read full article  
 
9. Noise complaints in Europe:
 
Source: @EU_Eurostat   Read full article  
 
10. When Europe switched from Julian to Gregorian calendar:
 
Source: reddit  

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