The Daily Shot: 15-Apr-21
• The United States
• The United Kingdom
• The Eurozone
• Asia – Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Rates
• Global Developments
• Food for Thought
The United States
1. The Fed’s Beige Book report was more upbeat than the markets were expecting. The survey also showed an increase in inflation.
Source: MarketWatch Read full article
Economic uncertainty and COVID concerns are easing (2 charts).
Source: @GregDaco, @federalreserve, @OxfordEconomics
Source: @zerohedge
Beige Book activity indicators (based on the language used in the report) are up sharply (2 charts), pointing to an acceleration in growth.
Source: @BostjancicKathy
Source: Bespoke Investment Group; @pearkes
Stocks pulled back from the highs after the Beige Book report was released (due to inflation concerns).
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2. Now, let’s take a look at some inflation trends.
• A recently launched ETF that focuses on inflation-sensitive stocks continues to attract capital.
Source: Horizon Kinetics
• Import price inflation surprised to the upside.
Below is the same index excluding petroleum imports.
• Here is a CPI forecast from Barclays.
Source: Barclays Research
• Small businesses are gaining some pricing power.
Source: @jeffsparshott
• Below are a few sector CPI trends.
– Going out vs. staying in:
Source: @jeffsparshott
– Car rental CPI (year-over-year and month-over-month):
– Rent:
– Hotels:
– Men’s suits:
– Physicians’ services:
– Haircuts:
Source: @TCosterg
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3. Next, we have some updates on the housing market.
• Mortgage applications for house purchase moved lower last week (now below 2019 levels).
Refi activity continues to slow.
• However, mortgage rates are now drifting lower.
• Bidding wars have pushed home sale prices above list prices.
Source: Bloomberg Read full article
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4. Investors expect the Fed to give a timeline of tapering QE purchases by September, aiming for a January start, according to a survey by Evercore ISI (2 charts).
Source: Evercore ISI
Source: Evercore ISI
Primary dealers expect a Fed taper by Q1 of next year and a rate hike in late 2023.
Source: Morgan Stanley Research
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5. Business applications are surging (2 charts).
Source: @bespokeinvest Read full article
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6. Retail traders are more upbeat on the economy, according to an E*Trade survey.
Source: E*Trade Financial
7. Household net worth has risen along with government debt over the past decade.
Source: Alpine Macro
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The United Kingdom
1. Trade with the EU showed some improvement in February.
Source: Bloomberg Read full article
2. The vaccination differential with Germany points to a lower EUR/GBP.
Source: ANZ Research
3. What are the benefits of remote work?
Source: Chris Hughes, Bloomberg Read full article
4. This chart shows UK park visits by age.
Source: Huq Read full article
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The Eurozone
1. Industrial production eased in February.
2. More gains for producer price inflation ahead?
Source: Pantheon Macroeconomics
3. Is previously misallocated capital burdening the euro area?
Source: BCA Research
4. This chart shows Italian and German unit labor costs (a measure of competitiveness).
Source: Evercore ISI
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Asia – Pacific
1. The Bank of Japan has increased its purchases of domestic equities as foreigners retreated over the past few years.
Source: BCA Research
2. Asia’s central banks are not concerned about inflation.
Source: Arbor Research & Trading
3. New Zealand’s home sales surged again last month.
4. Next, we have some updates on Australia.
• The employment report topped economists’ forecasts, although job gains were driven by part-time positions.
– The unemployment rate continues to fall.
Here is a comparison with previous downturns.
Source: ANZ Research
– The labor force participation rate hit a record high.
• Consumer inflation expectations are back near the lows.
• The stock market is almost back to the pre-COVID peak.
h/t @ThuyOng
Back to Index
China
1. Housing market metrics have been robust.
Source: Gavekal Research
2. Time to shrink the world’s largest money market fund?
Source: @WSJ Read full article
3. Who controls China’s mobile payments market?
Source: Bloomberg Read full article
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Emerging Markets
1. India’s pandemic situation is out of control.
This chart shows India’s vaccination trend.
Source: ING
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2. Indonesia’s vehicle sales are back at pre-crisis levels.
3. COVID cases in Turkey are accelerating.
Investors have been pulling capital out of the country since the central bank chief’s removal.
Source: @WSJ Read full article
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4. South Africa’s retail sales jumped in February.
5. Here are some updates on Russia.
• Capital outflows continue to weigh on the Russian ruble.
Source: ING
• The current ruble weakness, mainly due to non-oil factors, has led to decoupling from oil prices (2 charts).
Source: ING
Source: Oxford Economics
• The ruble’s underperformance versus peers is the most extreme since 2018.
Source: ING
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6. Russia, India, and Nigeria have some of the highest levels of non-performing loans relative to EM peers.
Source: Capital Economics
7. This chart illustrates the vaccination progress across EM economies.
Source: TS Lombard
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Cryptocurrency
1. Cryptocurrencies continue to rally, with many hitting record highs.
• Ethereum:
• Dogecoin:
Source: FTX
Source: @WSJ Read full article
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2. Coinbase popped at the open but declined over the next two hours. Some investors were hoping to see a higher valuation.
Source: Reuters Read full article
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3. The “kimchi premium” is back.
Source: Kyungji Cho, @TheTerminal, Bloomberg Finance L.P. Read full article
4. How long did it take to reach a $1 trillion valuation?
Source: @Schuldensuehner, Markets Insider Read full article
5. Is bitcoin a bubble?
Source: BofA Global Research; Gustavo Fuhr
Back to Index
Commodities
1. Iron ore futures are moving higher.
2. Copper prices have given up some of their gains versus oil this year.
Source: BlackRock
Goldman now expects sharp price gains for copper in the years ahead, …
Source: Goldman Sachs; @themarketear
… as supplies shrink.
Source: Goldman Sachs; @themarketear
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Energy
1. Crude oil futures jumped on Wednesday, …
… as US inventories declined more than expected.
Source: Fundamental Analytics
Here are the crude oil and gasoline inventories measured in days of supply.
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2. Refinery runs have leveled off.
US gasoline demand is trending higher.
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3. The SPDR Oil & Gas Exploration & Production ETF is at long-term resistance.
Source: @TaviCosta
4. This chart shows US electricity production by fuel source.
Source: @TheBigDataStats Read full article
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Equities
1. US stocks continue to outperform peers in other advanced economies.
Source: @ISABELNET_SA, @BofAML
2. What does the S&P 500 price-to-sales ratio tell us about returns over the next five years?
Source: Michal Stupavsky
3. Tobin’s Q tells us that it’s much cheaper to build businesses internally than to buy them.
4. Liquidity is negatively correlated with volatility.
Source: JP Morgan; Ahmad Azeem
5. Fund managers remain extremely overweight equities.
Source: BofA Global Research
6. The healthcare sector is at support relative to the S&P 500.
Source: Nautilus Investment Research; Tilo Marotz
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Rates
1. Here is a look at 10-year Treasury yield moves across time zones.
Source: Morgan Stanley Research
2. The breakeven curve remains inverted (the market expects inflation to moderate over the long run).
Source: @lisaabramowicz1
3. LIBOR replacement benchmarks in the US and Japan are not getting much traction.
Source: @markets Read full article
4. The 10yr USD swap spread is negative again (as US mortgage rates move lower).
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Global Developments
1. The UK COVID testing data suggest that post-vaccine antibodies may be waning.
Source: Deutsche Bank Research
2. Oxford Economics expects a stronger dollar this year, in line with rising yields (2 charts).
Source: Oxford Economics
Source: Oxford Economics
However, the rise in US external funding needs could weigh on the dollar.
Source: Oxford Economics
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3. The FX market is still dominated by USD.
Source: Morgan Stanley Research
4. The dollar’s share of the world’s currency reserves is drifting lower.
Source: Nordea Markets
5. How will the following assets perform over the next 12 months?
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
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Food for Thought
1. US child tax credit proposal:
Source: Brookings Read full article
2. Homicides vs. inequality globally:
Source: Christopher J. Ferguson and Sven Smith, Stetson University Read full article
3. US climate-related costs:
Source: Brookings Read full article
4. Food waste (2 charts):
Source: Statista
Source: Statista
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5. US IT spending:
Source: @adam_tooze Read full article
6. Technology’s impact on business:
Source: McKinsey Insights Read full article
7. COVID in perspective:
Source: @financialtimes Read full article
8. Manhattan rentals days on the market:
Source: Bloomberg Read full article
9. Most oddly named towns:
Source: Estately
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