Posted on by The Daily Shot Editor: Lev Borodovsky

The gap between new and existing home prices has narrowed

The Daily Shot: 07-May-21
• The United States
• The United Kingdom
• The Eurozone
• Europe
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Equities
• Credit
• Global Developments
• Food for Thought

 

The United States

1. Let’s begin with the labor market.
 
• Initial jobless claims remain on a downward path.
 
Source: Oxford Economics  
 
The total number of Americans receiving unemployment benefits is also declining.
 
Source: @GregDaco  
 
• Here is a look at job openings on Indeed by sector.
 
Source: @WSJ   Read full article  
 
• Despite a relatively high unemployment rate, the number of applicants has been lagging openings.
 
Source: @WSJ   Read full article  
 
Is the extra $400/week in benefits keeping some from returning to work? Several state governments think so.
 
Source: @axios  
 
• Labor productivity increased more than expected last quarter.
 

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2. Next, we have some updates on housing.
 
• Loan applications to purchase a home decreased again last week.
 

 
• The gap between new and existing home prices has narrowed over the past few years.
 
Source: III Capital Management  
 
• Is the eviction moratorium about to end?
 
Source: @WSJ   Read full article  

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3. US household net worth has risen faster than consumption.
 
Source: Alpine Macro  
 
4. Companies are onshoring to the US again.
 
Source: Cornerstone Macro  
 
Most companies are onshoring to southeastern states.
 
Source: Cornerstone Macro  

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5. Which imports drove the recent increase in trade deficit?
 
Source: @WSJ   Read full article  
 
6. Here is the impact of the American Families Plan and Build Back Better proposals on the federal deficit (according to Moody’s Analytics).
 
Source: Moody’s Analytics  

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The United Kingdom

1. The BoE upgraded its economic forecasts.
 
Source: Reuters   Read full article  
 
Source: CNBC   Read full article  
 
Source: ING  
 
The reduction in bond purchases is not considered “tapering” because the BoE doesn’t have an unlimited QE program like the Fed.
 
Source: MarketWatch   Read full article  

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2. Longer-term market-based inflation expectations have been rising.
 

 
3. The updated April Markit Services PMI figure was even stronger than the earlier report, as Britain reopens.
 

 
Hiring is accelerating.
 

 
We should see a sharp increase in economic growth.
 
Source: Pantheon Macroeconomics  

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4. This chart shows the year-to-date stock and bond market performance.
 
Source: S&P Global Market Intelligence  
 
5. Since the start of the pandemic, online retail sales have increased substantially (as a percentage of total sales).
 
Source: STUC   Read full article  
 
6. Who funds the UK’s venture capital investments?
 
Source: @amyrlewin, @collectivequity   Read full article  

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The Eurozone

1. Germany’s factory orders continue to climb.
 

 
But the recovery in industrial production has been lagging.
 

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German construction activity remains soft.
 

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2. Euro-area retail sales surged in March.
 

 
3. This chart breaks down the resource allocations of the national recovery plans.
 
Source: Bruegel   Read full article  

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Europe

1. Here are some updates on Sweden.
 
• Service industries expanded rapidly last month.
 

 
• Private sector output surged in March.
 

 
• Household consumption is recovering.
 

 
• Here is the historical seasonality in Swedish stocks.
 
Source: Nordea Markets  

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2. EU asylum applications delined last year.
 
Source: Eurostat  
 
3. What are the main destinations for the EU’s waste?
 
Source: Eurostat   Read full article  

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China

1. Markit’s service-sector PMI showed further improvement in growth last month (exceeding forecasts).
 

 
2. Exports are surging this year.
 

 
But as commodity prices soar, imports climb quickly as well ($ value).
 

 
Here is the trade balance.
 

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3. The renminbi continues to climb vs. USD.
 

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Emerging Markets

1. Let’s begin with India.
 
• COVID cases hit 400,000 per day.
 

 
And that’s causing havoc in the shipping industry (which is already strained).
 
Source: @adam_tooze, @financialtimes   Read full article  
 
• Bond yields declined further amid RBI’s support.
 

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2. Philippine exports hit a record high.
 

 
3. This chart illustrates the growth of the middle class in select economies.
 
Source: J.P. Morgan Asset Management  

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Cryptocurrency

1. Crypto trading surged this year.
 
Source: @jessefelder, @financialtimes   Read full article  
 
2. Crypto-related Twitter activity has been soaring.
 
Source: Arbor Research & Trading  
 
3. The media has jumped on the bandwagon with positive coverage (helps with the ratings).
 
Source: Arbor Research & Trading  
 
4. The share price of Coinbase has given up much of the post-IPO gains.
 

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Commodities

1. Commodity markets are on fire.
 
• Bloomberg’s broad commodity index:
 

 
• The LME’s metals index:
 

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2. The CRB Core Commodity Index is at long-term resistance.
 
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital  
 
3. COMEX copper cleared the 2011 peak.
 

 
4. China’s thermal coal futures hit a new high.
 

 
5. Gold is above $1,800/oz again.
 
Source: barchart.com  
 
6. CBOT corn futures are the most overbought since January, which led to a period of sideways trading.
 
Source: Dantes Outlook  
 
8. With soybean prices hitting multi-year highs, …
 

 
… soybean oil has been outperforming palm oil.
 
h/t James Poole  

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7. Next, we have some updates on lumber.
 
• FTX created a futures contract on lumber, providing access to the Reddit crowd.
 
Source: Bloomberg   Read full article  
 
• The curve is in deep backwardation amid supply/demand imbalances.
 
Source: III Capital Management  
 
The difference between May and November delivery is at an extreme.
 
Source: III Capital Management  

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8. The CME Group will permanently end open-outcry trading for all products except Eurodollar options.
 
Source: Crain’s Chicago Business   Read full article  

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Equities

1. US stocks have been outperforming global peers since March.
 

 
The valuation gap has widened sharply.
 
Source: Gavekal Research  

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2. US stocks perform well when the ISM Manufacturing PMI rises.
 
Source: Chen Zhao  
 
3. Strong earnings growth is supporting dividend hikes. 
 
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital  
 
4. Corporate guidance is back.
 
Source: @ISABELNET_SA, @BofAML  
 
5. Next, we have some sector updates.
 
• Dow transport stocks relative to utilities are testing resistance. Will we see a pause in the cyclical rally?
 
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital  
 
• The weakness in tech stocks earlier this year coincided with lock-ups ending for IPO insiders.
 
Source: Nordea Markets  
 
• Here is the relative performance for select sectors over the past five business days.
 
– Metals & Mining:
 

 
– Telecoms:
 

 
– Pharma and biotech (see story):
 

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6. Companies with weaker balance sheets continue to outperform.
 

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Credit

1. This chart shows investment-grade bond yields vs. duration by sector.
 
Source: Mizuho Securities USA  
 
2. Next, we have corporate debt (long- and short-term) as a percentage of the GDP.
 
Source: Mizuho Securities USA  
 
3. Which sectors are the most vulnerable over the next 12 months?
 
Source: S&P Global Market Intelligence  

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Global Developments

1. Global food prices are up over 30% vs. a year ago.
 

 
2. Here is the private-sector credit impulse.
 
Source: @macro_daily  
 
3. The bond market size surged last year.
 
Source: J.P. Morgan Asset Management  
 
4. Morgan Stanley forecasts a wider US current account deficit which could weigh on the dollar.
 
Source: Morgan Stanley Research  
 
However, relationships between currencies and the current account are mixed and mostly statistically insignificant, according to Morgan Stanley.
 
Source: Morgan Stanley Research  
 
There is a much more consistent relationship between imports and currency movements. 
 
Source: Morgan Stanley Research  

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Food for Thought

1. Union membership globally …
 
Source: Statista  
 
… and in the United States:
 
Source: Statista  

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2. Revenue per employee:
 
Source: @WSJ   Read full article  
 
3. Patent applications:
 
Source: J.P. Morgan Asset Management  
 
4. Violence and fetishization:
 
Source: polici   Read full article  
 
5. Race/ethnicity representation in financial services:
 
Source: @financialtimes   Read full article  
 
6. Religious service attendance in the US:
 
Source: Gallup   Read full article  
 
7. US households’ stock holdings as a share of total financial assets:
 
Source: @WSJ   Read full article  
 
8. The altitude of space junk from the disintegrating Chinese rocket:
 
Source: SciTechDaily   Read full article  
 
9. Literal names of places in the US and Canada:
 
Source: Mental Floss   Read full article  

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Have a great weekend!

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