The Daily Shot: 30-Apr-21
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Japan
• Asia – Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Rates
• Food for Thought
The United States
1. The first-quarter GDP report was roughly in line with expectations.
• The economy has almost recovered.
Source: @axios Read full article
• Higher consumer spending (mostly on goods) drove much of the gains last quarter (3 charts).
Source: @WSJ Read full article
Source: Piper Sandler
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• We have now seen three consecutive quarters of growth in business investment.
Source: @WSJ Read full article
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• Shrinking inventories were a drag on growth, which bodes well for the Q2 GDP (restocking).
• The nominal GDP grew 10.7% in Q1 and is now well above the pre-pandemic highs.
• The **GDP deflator**https://www.investopedia.com/terms/g/gdppricedeflator.asp
** was much higher than expected (highest increase since 2007), accounting for the gap between the nominal and real GDP figures.
• How does the GDP trajectory compare to the post-2008 recovery?
Source: @WSJ Read full article
Where do we stand relative to the CBO’s potential GDP estimate?
Source: Mizuho Securities USA
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• Now, let’s take a look at some forecasts.
– Morgan Stanley’s quarterly projection:
Source: Morgan Stanley Research
– Oxford Economics 2021 estimate:
Source: @GregDaco
– The GDP trajectory relative to the pre-pandemic trend:
Pantheon Macroeconomics:
Source: Pantheon Macroeconomics
ING:
Source: ING
Oxford Economics:
Source: @GregDaco
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2. March pending home sales came in well below forecasts amid tight inventories and soaring prices.
Source: Mortgage News Daily Read full article
Source: CNBC Read full article
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3. Consumer confidence continues to recover.
Source: Gallup Read full article
Business confidence is surging, …
… as US companies enjoy more pricing power than global peers.
Source: IIF
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4. Initial jobless claims continue to drift lower as the labor market heals.
Source: Oxford Economics
Applications for extended benefits are down sharply.
Source: Oxford Economics
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5. Unlike 2009, the Fed has revised its growth estimates higher following the pandemic-induced recession.
Source: BlackRock
6. Finally, we have the composition of Biden’s 4 trillion economic plan.
Source: The New York Times Read full article
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Canada
1. The loonie keeps climbing vs. USD, …
… as the BoC’s policy diverges from the Fed’s.
Source: Alpine Macro
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2. The CFIB small business index retreated from the highs.
3. Notes (cash) in circulation spiked at the outset of the pandemic.
Source: Bank of Canada Read full article
At the same time, bank deposits dropped and still have not recovered.
Source: Bank of Canada Read full article
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The United Kingdom
1. The Lloyds Business Barometer is now above pre-pandemic levels.
2. Labor market dynamics during the COVID crisis were quite different from what we saw after 2008.
Source: TS Lombard
3. Immigration seems to be rebounding.
Source: Pantheon Macroeconomics
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The Eurozone
1. Euro-area longer-dated rates are rising.
• 10yr Bund:
• Dutch 5yr yield:
• The 10yr swap rate:
Here is the swap curve.
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2. April inflation reports were a bit firmer than expected.
• Germany:
• Spain:
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3. Business sentiment indicators strengthened substantially faster than economies were projecting.
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4. Germany’s unemployment unexpectedly increased.
5. Spain’s unemployment rate edged lower.
6. Here is the breakdown of Italy’s recovery plan.
Source: @fwred, @nghrbi
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Europe
1. Let’s begin with Sweden, where economic growth is accelerating.
• The Q1 GDP growth (above consensus):
• March retail sales (very strong):
• Economic sentiment:
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2. Swiss economic expectations have surged this year.
3. Next, we have some data on EU exports to China.
Source: @adam_tooze, @financialtimes Read full article
4. This chart shows vehicle production per employee.
Source: @ACEA_eu Read full article
5. Here is a look at the unemployment rate across Europe in 2020.
Source: Eurostat Read full article
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Japan
1. The labor market is recovering.
• The unemployment rate:
• Jobs-to-applicants ratio:
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2. Industrial production exceeded forecasts.
3. The April Tokyo core CPI is back at zero.
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Asia – Pacific
1. South Korea’s industrial production continues to expand at a healthy pace.
2. Australia’s private-sector credit expansion keeps slowing, driven by business lending contraction. But housing credit growth is strengthening.
3. Next, we have some updates on New Zealand.
• Consumer confidence is recovering.
• Border crossings ground to a halt since the beginning of the pandemic as travel restrictions were put in place.
Source: RBNZ Read full article
• New Zealand’s transportation industry has taken a massive hit during the pandemic.
Source: RBNZ Read full article
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China
1. We are getting some contradicting PMI data this month.
• The Markit manufacturing PMI report showed faster growth (above forecasts). That’s consistent with the World Economics SMI trend (see chart from last week).
Factories are hiring again.
• However, the official PMI report showed slower growth.
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2. Fundraising in strategic industries, such as semiconductors, soared last year (encouraged by Bejing).
Source: Gavekal Research
3. How much of their revenues do companies generate abroad?
Source: Bruegel Read full article
4. Here is the number of Global Fortune 500 firms based in China.
Source: Bruegel Read full article
5. Next, we have some updates on China’s demographics.
• China’s population fell last year.
Source: @adam_tooze, @financialtimes Read full article
• Marriage rates are falling, while divorces are increasing.
Source: @WSJ Read full article
• Projections show further population declines ahead, which will be a drag on growth (2 charts).
Source: @chartrdaily
Source: Deutsche Bank Research
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Emerging Markets
1. The Indian rupee is rebounding.
Separately, India’s interest expenses are putting a heavy burden on the government’s finances.
Source: Alpine Macro
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2. Turkey’s economic confidence deteriorated this month as the lira tumbled.
3. Here are some updates on North Korea.
• North Korea’s economy contracted over the past decade.
Source: Fitch Solutions Macro Research
• Here is how sanctions changed North Korean exports.
Source: Fitch Solutions Macro Research
• Trade with China has slowed.
Source: Fitch Solutions Macro Research
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4. Colombia’s debt has been trading at junk levels.
Source: Bloomberg Read full article
5. Argentina’s consumer confidence is deteriorating again.
6. China’s loans to other countries increasingly use confidentiality clauses.
Source: Anna Gelpern, Sebastian Horn, Scott Morris, Brad Parks, Christoph Trebesch Read full article
Some of the borrowers are massively indebted to China.
Source: Bloomberg Read full article
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Cryptocurrency
1. Bitcoin has underperformed other large cryptocurrencies this month while XRP took the lead.
Source: FinViz
2. Ethereum is headed toward $3k.
Ethereum (ETH) spot volumes have picked up since mid-April.
Source: @skewdotcom
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3. Bitcoin performs well in risk-on environments.
Source: BCA Research
4. Bitcoin price volatility is 15 times higher than the dollar.
Source: Alpine Macro
5. The average daily turnover for cryptocurrencies is roughly 3% of the overall foreign exchange turnover, according to BCA Research.
Source: BCA Research
6. This chart shows the rise in cryptocurrency market cap versus gold.
Source: BCA Research
7. Decentralized finance (DeFi) is now a $100 billion sector.
Source: CoinGecko
8. This chart compares the total funds entrusted in DeFi smart contracts to funds that went to founders in initial coin offerings (ICOs) during the 2017-2018 boom (right before the bust).
Source: CoinDesk Read full article
9. The media has been captivated by cryptocurrencies (2 chars).
Source: Arbor Research & Trading
Source: Arbor Research & Trading
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Commodities
1. Gold demand held steady last quarter.
Source: Goldhub Read full article
2. Time to cut down some of those trees in the backyard.
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Energy
1. Global oil demand expectations were largely revised higher for 2021 this month.
Source: Evercore ISI
The spread between Goldman’s pre-covid and current demand projections is tightening.
Source: Goldman Sachs; @HFI_Research
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2. There is a close but nonlinear relationship between global oil demand and the Brent oil price.
Source: Evercore ISI
3. Energy companies have diverging views on long-term oil demand.
Source: Evercore ISI
4. Here is China’s energy consumption over time.
Source: Gavekal Research
5. This chart shows US wind and solar capacity.
Source: S&P Global Market Intelligence
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Equities
1. The proportion of S&P 500 companies beating earnings estimates hit a new record.
Source: Deutsche Bank Research
2. Here is an illustration of how reopening is impacting different sectors.
Source: @WSJ Read full article
3. Searches for trading content and strategies have retreated from last year’s craze.
Source: Arbor Research & Trading
Investor searches have become more bearish over the past two weeks, which typically precede periods of elevated volatility.
Source: Arbor Research & Trading
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4. CTAs remain bullish.
Source: @ISABELNET_SA, @Nomura
5. Dividends are recovering.
Source: @WSJ Read full article
6. This chart shows US households’ equity holdings by wealth category.
Source: @ISABELNET_SA, @GoldmanSachs
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Credit
1. AAA CLO spreads have tightened substantially amid stronger demand from banks this year.
2. Leveraged loans’ amend-to-extend volume accelerated last month.
Source: @lcdnews
3. Covenant-lite share of leveraged loans outstanding is nearing 85%.
Source: S&P Global Market Intelligence
4. The private credit market is approaching $1 trillion.
Source: @markets Read full article
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Rates
1. Treasury bill yields are moving deeper into negative territory.
The government sold bills at zero yield again.
Source: @markets Read full article
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2. Zero/negative money market rates have created strong demand for the Fed’s RRP program.
Source: Oxford Economics
3. This chart shows Morgan Stanley’s estimate of the US shadow overnight rate (extremely accommodative policy).
Source: Morgan Stanley Research
4. The market is very hawkish relative to the Fed dots.
Source: BCA Research
5. The 10-year Treasury yield is entering a seasonally weak period.
Source: BCA Research
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Food for Thought
1. The world’s most valuable companies:
Source: @adam_tooze, @financialtimes Read full article
2. US agricultural trends:
Source: polici Read full article
3. Office space per employee:
Source: Hoya Capital Real Estate
4. The purpose of education:
Source: Brookings Read full article
5. Universities with the most student loan originations:
Source: @howmuch_net Read full article
6. Share of urban population:
Source: @financialtimes Read full article
7. Black population in the US:
Source: Pew Research Center Read full article
8. EV sales by region:
Source: @axios Read full article
9. Most-watched TV news interviews:
Source: @axios Read full article
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Have a great weekend!
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