The Daily Shot: 26-Mar-21
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Asia – Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Rates
• Financial Quant Survey – Part 1
• Food for Thought
The United States
1. Let’s begin with the labor market.
• Initial jobless applications dropped to a post-pandemic low.
Source: The New York Times Read full article
• Online job search activity shows some improvement.
Source: @DataArbor, @PeterSForbes
• Restaurant jobs should be rebounding.
Source: Capital Economics
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2. Business applications remain elevated.
3. Next, we have some updates on the housing market.
• Mortgage rates are grinding higher.
• The number of refi candidates (borrowers who would benefit from refinancing their loans at current rates) has declined.
Source: Black Knight
• Mortgage originations are dominated by borrowers with the highest credit scores.
Source: NY Fed Read full article
• On average, there are now four offers received for each residential property sold in the US.
Source: Scholastica Gay Cororaton, National Association of REALTORS
• This map shows the median time it takes to sell a house.
Source: Scholastica Gay Cororaton, National Association of REALTORS
• The US needs an additional 2.7 million homes to meet near-term demand.
Source: Scholastica Gay Cororaton, National Association of REALTORS
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4. The Kansas City Fed’s regional manufacturing report points to rapid growth in factory activity.
• Backlog of work:
• Expected employment:
As we see in other surveys, supply chains remain strained.
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5. Automobile inventories are near multi-year lows.
Source: @WSJ Read full article
6. The New York Fed’s national economic activity index (WEI) shows acceleration in growth.
7. The Oxford Economics Recovery Tracker is trending higher.
Source: Oxford Economics
8. The equity-to-bond ratio points to a strengthening economy.
Source: Alpine Macro
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Canada
1. The CFIB small/medium-size business index hit the highest level in a decade.
Retail activity is rebounding.
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2. Just like in the US, residential investment surged last year.
Source: @WSJ Read full article
3. Canadian banks appear cheap based on the relative price-to-earnings ratio.
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
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The United Kingdom
1. The CBI index suggests that retail sales remain subdued.
But retailers are hopeful.
Source: Reuters Read full article
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2. UK relative equity valuations are near decade lows.
Source: Oxford Economics
Separately, UK equity inflows could bode well for GBP/USD.
Source: Oxford Economics
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3. The market expects rate hikes in a couple of years.
Source: @financialtimes Read full article
4. The gilt-Bund yield spread has widened substantially this year.
Source: @financialtimes Read full article
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The Eurozone
1. German consumer confidence is rebounding.
Separately, here are the latest polls.
Source: Gavekal Research
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2. French business expectations have fully recovered.
3. The broad money supply expansion ticked lower last month.
Here is loan growth across the euro area.
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4. The 3-month Euribor rate is deep in negative territory.
Source: @WSJ Read full article
5. Households are sitting on massive savings.
Source: Pantheon Macroeconomics
6. Here is the composition of consumer spending.
Source: Morgan Stanley Research
7. This chart shows the contributions to investment since 2005.
Source: ECB Read full article
8. EUR/USD is below the 200-day moving average.
Source: barchart.com
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Europe
1. Czech consumer and business confidence remains depressed.
2. How do Europeans view different vaccines?
Source: YouGov Read full article
3. This chart shows satisfaction with democracy across Europe.
Source: The Economist Read full article
4. European stock investors remain cautious (see definition of put/call ratio).
Source: @JeffreyKleintop
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Asia – Pacific
1. The Tokyo core CPI ticked higher this month.
2. The yen has diverged for the US-Japan short-term rate differential.
Source: Fitch Ratings
3. South Korea’s consumer confidence is rebounding.
4. Exceptionally low rates contributed to New Zealand’s housing bubble.
Source: @WSJ Read full article
5. A higher percentage of Australia’s mortgages now have fixed rates.
Source: ANZ Research
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China
1. The Shanghai Shenzhen CSI 300 Index held support at the 200-day moving average.
2. Manufacturing business confidence is at multi-year highs.
Source: World Economics
3. State-owned firms have cut back their borrowing.
Source: China Beige Book
4. Onshore corporate bond defaults surged this year.
Source: @MollyDai, @TheTerminal, Bloomberg Finance L.P.
5. Hong Kong’s exports remain strong.
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Emerging Markets
1. Let’s begin with Mexico.
• January was a rough month for the nation’s economy.
– Retail sales:
– Economic activity:
• Just like in the US, goods and services inflation trends have diverged.
Source: Scotiabank Economics
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2. Colombia’s business confidence has fully recovered.
3. USD/TRY (Turkish lira per one dollar) held resistance at 8.0.
Source: barchart.com
4. Here are the equity leaders and laggers over the past year.
Source: S&P Global Market Intelligence
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Cryptocurrency
1. The largest Bitcoin fund is trading at a substantial discount to NAV.
Source: Bloomberg Read full article
2. Here is JP Morgan’s Bitcoin positioning proxy.
Source: JP Morgan; @themarketear
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Commodities
1. Gold ETF volatility is breaking down.
Source: Longview Economics
2. The platinum market has been in deficit.
Source: @WSJ Read full article
3. US softs have been rolling over.
• Sugar:
• Cotton:
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4. Chicago lean hog futures are at the highest level since 2014.
5. Wheat remains under pressure.
Source: @WSJ Read full article
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Energy
1. US crude oil production is back at pre-polar-vortex levels.
Source: Joel Fingerman
2. Here is an illustration of global oil chokepoints. By the way, the Suez situation is not expected to have a substantial impact on prices.
Source: Statista
3. More Americans are concerned about energy availability and affordability (driven by the massive power outages in Texas).
Source: Gallup Read full article
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Equities
1. The Fed’s announcement on bank dividends and share buybacks boosted financials.
Source: @WSJ Read full article
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2. The Reddit crowd’s favorite stocks soared on Thursday.
Here is the SPDR retail ETF, which has been whipsawed by these stocks.
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3. Major US indices are not trading in unison.
Source: BloombergQuint Read full article
4. Next, we have some updates on SPACs.
• It’s been a good quarter for SPAC deals.
Source: @WallStJesus; CNBC Read full article
• Regulators are taking a look at SPAC-related practices.
Source: Reuters Read full article
• It’s been a tough month for SPAC prices.
• SPACs are no longer popping immediately after their IPOs.
Source: @WallStJesus; CNBC Read full article
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5. The momentum factor has experienced substantial volatility.
h/t @xieyebloomberg
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6. This chart shows share buybacks by sector.
Source: @ISABELNET_SA, @BofAML
7. The VIX curve is quite steep relative to history.
Source: @markets Read full article
8. The AAII sentiment index shows increasing bullishness.
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Credit
1. US high-yield spreads widened at the fastest rate during the pandemic, with the full cycle lasting a little more than a year.
Source: Deutsche Bank Research
This is only the third time in history that rolling 12-month returns for US HY have been greater than 20%.
Source: Deutsche Bank Research
Developed market HY funds have seen record inflows at about 15% of assets under management over the past year.
Source: Deutsche Bank Research
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2. Typically, the rise in mergers and acquisitions has led to wider credit spreads.
Source: Variant Perception
3. Banks continue to boost their issuance of USD commercial paper (driven by foreign banks).
It’s hard to resist borrowing at these rates, especially for banks that don’t have access to US deposits.
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Rates
1. The latest 7-year Treasury note auction was better than the previous one.
Source: @BChappatta
But investors remain nervous given the massive supply hitting the market.
Source: Deutsche Bank Research
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2. The Fed’s central bank liquidity swaps outstanding are now near zero (no shortage of dollars globally).
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Financial Quant Survey – Part 1
Below we have some data on financial quants, based on a survey of Baruch MFE program graduates.
1. Where do financial quants work, and which markets are they involved with?
Source: Baruch MFE Program and The Daily Shot
2. What type of work do quants do on a daily basis?
Source: Baruch MFE Program and The Daily Shot
3. How did they handle the pandemic?
Source: Baruch MFE Program and The Daily Shot
Next week, we will take a look at compensation.
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Food for Thought
1. How concerned are you about inflation?
Source: @axios Read full article
2. The Suez Canal situation:
Source: @financialtimes Read full article
Source: @markets Read full article
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3. COVID-related modifications to religious services:
Source: Pew Research Center Read full article
4. Voter restriction laws:
Source: NLIHC Read full article
5. Satisfaction with US gun laws:
Source: Gallup Read full article
6. Southwest border apprehensions:
Source: The Washington Post Read full article
Source: @WSJ Read full article
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7. Vaccine eligibility:
Source: @bhrenton, @VermontDFR, @ariadnelabs
8. The comeback of vinyl records:
Source: Statista
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Have a great weekend!
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