The Daily Shot: 12-Apr-21
• The United States
• Canada
• The Eurozone
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. The March PPI report topped economists’ forecasts.
• The headline PPI:
• Core:
• Core ex. trade services:
Base effects were a significant portion of the year-over-year PPI increase. Here is an example. Wholesale gasoline prices are simply back to 2019 levels, but it’s a 50%+ jump from last year’s lows.
How much of the core PPI increase was due to base effects? Below is an estimate.
Source: Mizuho Securities USA
Here is a select set of PPI trends.
• Light trucks:
• Mobile homes:
• Truck transportation of freight:
• Hospital care (wholesale):
• Portfolio management:
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2. Next, we have a couple of additional updates on inflation.
• Will rapidly rising housing prices boost rent and owners’ equivalent rent inflation?
Source: ING
• Will core PCE catch up to the rise in the ISM manufacturing price index?
Source: DBS
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3. Business-to-business sales point to a rebound in brick & mortar retailers’ activity.
Source: Moody’s Analytics
• Here is the Evercore ISI survey of retailers.
Source: Evercore ISI
• Retailers’ inventories-to-sales ratio hit a new low.
Further reading
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4. What does the BofA credit/debit card data tell us about household spending relative to February of 2020?
Source: BofA Global Research
5. Below is another spider chart showing the labor market changes since the end of 2019.
Source: Atlanta Fed
6. What are the drivers of economic growth through the end of 2022?
Source: Moody’s Analytics
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Canada
1. The employment report was quite strong (surprising to the upside again).
• Job gains:
• By sector:
Source: Oxford Economics
• Total employment (approaching full recovery):
• The unemployment rate:
• Labor force participation:
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2. COVID cases have been climbing, but fatalities appear to be stable.
Source: Desjardins
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The Eurozone
1. As we saw last week (here), Germany’s February industrial production was disappointing. French manufacturing output was also soft.
Here is Spain’s industrial production.
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2. Italy’s retail sales recovery has stalled.
3. The sensitivity of Eurozone and German growth to the global PMI has increased over the past 20 years.
Source: BCA Research
4. How much sovereign debt do euro-area banks hold?
Source: @financialtimes Read full article
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China
1. Alibaba shares jumped after Bejing announced a fine against the firm. The regulatory “overhang” is over for now.
2. China’s stock market has been underperforming global peers.
h/t @IshikaMookerjee
Source: @markets Read full article
Turnover has been soft.
Source: @markets Read full article
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3. Auto sales have recovered.
Source: @WSJ Read full article
4. Producer price gains have not peaked yet, according to Pantheon Macroeconomics.
Source: Pantheon Macroeconomics
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Emerging Markets
1. Brazil’s CPI is grinding higher.
The real has underperformed the Mexican peso in recent weeks.
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2. Mexico’s factory output deteriorated further in February, coming in below forecasts.
3. Guatemala’s remittances rose sharply.
4. The Russian ruble is widening its underperformance vs. other EM currencies.
5. Hungarian retail sales tumbled in February.
6. Lebanon’s hyperinflation shows no signs of peaking.
7. Many emerging economies experienced a contraction in their middle class last year.
Source: Bloomberg Read full article
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Cryptocurrency
1. Here are some estimates for Coinbase’s total market value based on revenue growth projections. Coinbase’s direct listing will trade on the Nasdaq exchange under the ticker COIN on April 14.
Source: Delphi Digital
The FTX “pre-listing” futures contract on Coinbase is trading above $550, which prices the firm near $145 bn.
Source: FTX, h/t FlowBank
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2. Bitcoin is back above $60k.
Source: barchart.com
3. Bitcoin spot volume is at its lowest point year-to-date.
Source: Skew
4. The following table ranks some of the largest cryptocurrencies based on relative strength and momentum over the past five weeks. Scores are based on the trend of relative price moves.
Source: Dantes Outlook
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Commodities
1. US steel prices are soaring.
Source: Yardeni Research
2. Lithium prices are up nearly 37% from a year ago.
3. Gold VIX is at support.
Source: barchart.com
Separately, India has boosted its gold imports.
Source: @markets Read full article
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4. Brent oil is testing resistance.
Source: Fitch Solutions Macro Research
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Equities
1. Tech shares have been narrowing their underperformance.
Will the Nasdaq 100 reach another high vs. the S&P 500 in the weeks ahead?
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2. Small-caps have been lagging over the past month.
Do we have a “head & shoulders” formation in the Russell 2000 index?
Source: Cam Hui
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3. The reflation trade has paused. This chart shows the materials sector relative to consumer staples.
Source: @StrategasRP
4. SPACs have been underperforming.
5. Equities’ correlation with the US dollar remains negative.
Source: @ISABELNET_SA, @MorganStanley
6. Global stocks ex-US are still below the 2007 peak.
Source: @ISABELNET_SA, @BofAML
7. How much of the S&P 500 revenue is generated outside of the US?
Source: @FactSet
8. Analysts have been rapidly upgrading their Q1 2021 earnings estimates.
Source: Deutsche Bank Research
9. TD Ameritrade customers (mostly retail investors) are increasingly bullish.
Source: TD Ameritrade
10. Citadel Securities controls almost half of the US retail flow.
Source: Bloomberg Read full article
11. How do you further speed up international orders?
Source: @WSJ Read full article
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Credit
1. US commercial paper balances continue to surge, driven by foreign banks.
2. Will US BBB-rated corporate debt remain resilient during a period of rising yields?
Source: Quill Intelligence
3. Real yields and credit implied volatility have been increasingly correlated.
Source: Arbor Research & Trading
4. US corporations have reduced short-term debt and increased liquid assets over the past 30 years. This suggests that duration extension will dominate new issuance, according to Mizuho.
Source: Mizuho Securities USA
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Rates
1. Investors have been favoring the 20yr Treasury vs. other long-dated debt in recent weeks.
2. The 10-year Treasury yield is approaching long-term resistance near 2%.
Source: Fitch Solutions Macro Research
3. Some dealers see the Fed hiking rates much faster than the forecasts from the FOMC.
Source: J B; Goldman Sachs
4. The Fed’s communications remain focused on employment and spending rather than inflation.
Source: Arbor Research & Trading
Messaging from Fed officials has been extremely dovish.
Source: Arbor Research & Trading
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Global Developments
1. Asset managers are trimming their bearish US dollar bets.
2. The dollar tends to fall in April.
Source: TS Lombard
3. Here is the global equity market-cap-to-GDP ratio.
Source: @Not_Jim_Cramer
4. This chart shows central banks’ balance sheets in US dollar terms.
Source: Mizuho Securities USA
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Food for Thought
1. Women in the workforce:
Source: @chartrdaily
2. How COVID changed projections for jobs in different professions:
Source: The New York Times Read full article
3. Filing questionable applications for unemployment benefits:
Source: @jeffsparshott
4. Semiconductor supply chain (2 charts):
Source: BCG, SIA Read full article
Source: @financialtimes Read full article
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5. Where most members of Congress went to college:
Source: Statista
6. The proposed US infrastructure package:
Source: @CSIS, @CSISEnergy, @lachlanrcarey, @stephenjnaimoli Read full article
7. Vaccination rates by ZIP-code income:
Source: The New York Times Read full article
8. Students behind schedule:
Source: McKinsey Read full article
9. Length of constitutions:
Source: @indiainpixels
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