The Daily Shot: 23-Apr-21
• The United States
• The United Kingdom
• The Eurozone
• Europe
• Japan
• Asia – Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Rates
• Food for Thought
The United States
1. Let’s begin with the Kansas City Fed’s manufacturing report, which made history this month. The strength of the region’s factory activity is extraordinary.
• Employment and work-hours indicators soared.
• CapEx expectations have risen sharply.
• As we’ve seen in other regions, the backlog of orders is surging.
• Price pressures are becoming acute.
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2. Economic activity indicators firmed up last month.
• The Chicago Fed National Activity Index:
• The Conference Board’s index of leading indicators:
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3. Next, we have some updates on the labor market.
• US initial jobless claims keep trending lower as the job market recovery continues.
Source: Oxford Economics
This chart shows claims for states’ extended unemployment benefits.
Source: Oxford Economics
• Businesses continue to report tightening labor markets.
Source: Arbor Research & Trading
Source: @axios, @Work Read full article
• This chart shows job openings as a share of employment.
Source: @WSJ Read full article
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4. Finally, here are some updates on the housing market.
• Last month’s existing-home sales held at multi-year highs for this time of the year but were below forecasts.
– Home sales growth is slowing toward the pre-pandemic trend.
Source: Mizuho Securities USA
– Tight inventories and rapidly rising prices have been a drag on sales.
– Here is the median price.
Source: Piper Sandler
• Mortgage rates continue to slide, with Freddie Mac’s 30-year index dipping below 3%.
• Homeowners have been taking more cash out of their houses when refinancing mortgages.
Source: Longview Economics
• Home price gains and rent inflation have diverged sharply over the past year, a trend that is probably not sustainable.
Source: Fitch Ratings
• Affordability measures show that US housing costs are not extreme.
Source: Mizuho Securities USA
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The United Kingdom
1. The CBI index of industrial orders pulled back this month.
But factories haven’t been this optimistic in decades.
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2. Consumer confidence continues to recover.
3. New housing supply is coming back, which could dampen home price appreciation.
Source: Pantheon Macroeconomics
4. Here is the Prime Minister’s job approval.
Source: Morning Consult
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The Eurozone
1. There weren’t any surprises from this week’s ECB meeting. However, the focus now turns to the June meeting …
Source: CNBC Read full article
… as the more hawkish policymakers push to scale back the stimulus.
Source: @financialtimes Read full article
Analysts expect net securities purchases to stabilize at a higher level, …
Source: @fwred
… with tapering starting later this year.
Source: Nordea Markets
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2. French manufacturing confidence surged this month.
3. Euro-area consumer confidence is approaching pre-crisis levels.
4. The Netherlands’ unemployment rate continues to moderate.
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Europe
1. Norway’s industrial confidence has rebounded.
2. Poland’s consumer confidence remains depressed.
But retail sales rose more than expected last month (the big spike is mostly due to base effects).
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3. European companies that tend to buy back their shares have outperformed substantially since last December.
h/t @mikamsika
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Japan
1. Inflation edged higher but remains subdued.
2. Manufacturing activity accelerated this month.
But service firms continue to struggle.
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3. Dollar-yen is testing support.
h/t Cormac Mullen
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Asia – Pacific
1. Taiwan’s unemployment rate is back at pre-crisis levels.
The nation’s factory activity has been outperforming China.
Source: Danske Bank
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2. Singapore’s inflation is rebounding.
3. South Korean president’s approval ratings continue to deteriorate.
Source: Morning Consult
4. Australia’s business activity is surging, with both manufacturing and services PMI measures hitting multi-year highs.
Here is NAB’s business confidence indicator.
Separately, the Australian dollar’s relationship to equities has increased in recent months.
Source: Morgan Stanley Research
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China
1. Huarong’s bonds have stabilized but have not fully recovered. Investors expect to take a loss despite the recent talk of a bailout.
Source: South China Morning Post Read full article
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2. The World Economics SMI measure shows stronger business activity this month.
Source: World Economics
3. Hong Kong’s unemployment rate appears to have peaked.
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Emerging Markets
1. The ruble bounced on signs of de-escalation.
Source: CNN Read full article
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2. The Brazilian real rose sharply amid more certainty around the nation’s budget.
3. Mexico’s unemployment rate declined sharply last month.
4. Mobility is deteriorating again in some Asian countries.
Source: ANZ Research
5. Here is the lockdown stringency index.
Source: TS Lombard
6. EM local-currency bond yields are now higher than US high yield debt.
Source: BlackRock
7. Some EM equity markets are undervalued.
Source: TS Lombard
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Cryptocurrency
1. Bitcoin dipped below $50k.
2. XRP is giving up much of the recent gains.
3. Here are the reasons some investors are not getting into cryptocurrencies.
Source: MagnifyMoney Read full article
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Commodities
1. COMEX copper hit the highest level in a decade.
• Similar to equities, there has been significant call option buying in copper.
Source: Morgan Stanley Research
• Will copper price follow China’s manufacturing PMI?
Source: Danske Bank
• Here is the AUM of the United States Copper Index Fund (CPER).
h/t @JinjLee
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2. US soft red winter wheat futures are above $7 a bushel for the first time since 2014.
Source: @WSJ Read full article
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Energy
1. Brent crude is at support.
2. US oil and gas executives mostly expect WTI crude oil to trade around $64 per barrel or lower this year, according to a survey by the Dallas Fed.
Source: Dallas Fed Read full article
However, they are more bullish on natural gas. Only 10% of executives surveyed expect Henry Hub natural gas to fall below $2.50.
Source: Dallas Fed Read full article
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3. Next, we have some data on wind turbine manufacturers.
Source: Istituto Affari Internazionali Read full article
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Equities
1. Talk of a capital gains tax hike put some pressure on stocks, especially bank shares. But futures are up this morning as traders buy the dip.
Source: The Hill Read full article
Capital markets businesses at the five major US banks had another standout quarter in Q1 (2 charts). There is some concern that an increase in the capital gains tax will dampen these revenues.
Source: Fitch Ratings
Source: Fitch Ratings
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2. More US companies are reporting higher than expected earnings and sales.
Source: BofA Global Research
BofA expects a US corporate tax hike becoming a major headwind for company earnings (2 charts).
Source: BofA Global Research
Source: BofA Global Research
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3. Breadth indicators for the S&P 500, Russells 2000, and the Nasdaq Composite are diverging.
Source: @sentimentrader Read full article
Here is the percentage of Nasdaq 100 members above their 50-day moving average.
Source: @SuburbanDrone
And this chart shows the spread between the Russell 2000 and the S&P 500 breadth.
h/t Cormac Mullen
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4. Should investors be concerned about a peak in margin debt?
Source: @enlundm
What about a peak in US manufacturing activity (ISM)?
Source: @ISABELNET_SA, @GoldmanSachs
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5. Many IPO and SPAC lock-ups end this summer. Will insider selling put pressure on the Nasdaq Composite?
Source: @enlundm
6. This chart shows equity sector valuations vs. historical averages.
Source: Goldman Sachs, @WallStJesus
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Rates
1. The 10yr Treasury yield is at support (50-day moving average).
h/t David Finnerty, @TheTerminal, Bloomberg Finance L.P.
2. The 5-year/5-year forward Treasury yield has converged with the Fed’s estimate of the long-run neutral rate (R*).
Source: Alpine Macro
3. The long-term US breakeven inflation curve tends to re-steepen when short-term inflation expectations peak.
Source: Nordea Markets
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Food for Thought
1. Healthcare workers burning out:
Source: The Washington Post Read full article
2. Happiness vs. job autonomy:
Source: McKinsey Read full article
3. Changes in US working population:
Source: The Washington Post Read full article
4. Tech companies’ age:
Source: Statista
5. Quantum technology:
Source: @financialtimes Read full article
6. Fox News vs. Newsmax and OAN:
Source: Pew Research Center Read full article
7. Exporters of vaccine ingredients:
Source: Open Knowledge Read full article
8. China’s incursions into Taiwan’s airspace:
Source: Statista
9. The beginning of national anthems across Europe:
Source: @languages.eu
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Have a great weekend!
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