Posted on by The Daily Shot Editor: Lev Borodovsky

Inflation concerns spreading across the economy

The Daily Shot: 17-May-21
• Administrative Update
• The United States
• Europe
• Asia – Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought

 

Administrative Update

Please note that The Daily Shot will not be published from May 27th to May 31st.

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The United States

1. After massive stimulus-driven gains in March, last month’s retail sales surprised to the downside. Some analysts have suggested that US consumers are starting to balk at rising prices.
 

 
Nonetheless, retail sales are running well above trend.
 

 
Here is the same index without seasonal adjustments.
 

 
Online shopping remains strong, but its share of the overall retail sales has eased.
 
Source: Mizuho Securities USA  
 
Consumers pulled back on mall shopping.
 
Source: The Daily Feather  
 
Here is the breakdown by sector.
 
Source: @GregDaco  

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2. Retailers’ inventories-to-sales ratio has cratered.
 

 
This chart shows new vehicle inventories.
 
Source: @WSJ   Read full article  

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3. The U. Michigan consumer sentiment index slumped in May, coming in well below market consensus. Once again, inflation concerns might be to blame.
 

 
Here are the sentiment trends for Republicans and Democrats.
 
Source: @TheTerminal, Bloomberg Finance L.P.  

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4. Manufacturing output expanded a bit faster than expected, …
 

 
… but is holding below 2018 and 2019 levels for this time of the year.
 

 
Chip shortages remain a drag (2 charts).
 
Source: The Daily Feather  
 

 
Factory capacity utilization is not back at pre-COVID levels yet.
 

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5. Next, we have some updates on inflation.
 
• Inflation concerns have spread across the economy.
 
– Consumer inflation expectations:
 

 
– Investor concerns:
 
Source: Evercore ISI  
 
– Business inflation expectations:
 
Source: @jeffsparshott  
 
– S&P 500 companies citing “inflation” on earnings calls:
 
Source: @FactSet   Read full article  
 
• Import prices increased more than expected last month.
 

 

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6. Americans are increasingly comfortable with many activities they have avoided since the start of the pandemic.
 
Source: Evercore ISI  

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Europe

1. Spain’s core CPI is back at zero.
 

 
The nation’s housing market is heating up.
 

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2. Greens are likely to be a part of Germany’s governing coalition.
 
Source: Commerzbank Research  
 
3. Here are Mario Draghi’s approval ratings.
 
Source: Morning Consult  

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4. Sweden’s inflation was a bit firmer than expected.
 

 
The unemployment rate continues to moderate.
 

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5. Norway’s Q1 GDP growth was a bit disappointing.
 

 
6. Poland’s Q1 GDP was softer than expected.
 

 
Polish exports hit a record high, but imports climbed even faster, shrinking the nation’s trade surplus.
 

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7. EU consumer confidence continues to improve.
 
Source: Gavekal Research  
 
8. Here is the projected growth map.
 
Source: EC   Read full article  
 
9. Expectations of stronger exports drove the upgrades in growth forecasts (#3 here).
 
Source: Pantheon Macroeconomics  
 
10. Finally, we have a map of workplace accidents across Europe.
 
Source: Statista  

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Asia – Pacific

1. Japan’s producer prices rose more than expected, driven by energy and metals.
 

 
2. Taiwan’s stock market has been tumbling in recent days amid investor deleveraging (2nd chart).
 

 
h/t @JeannyYu  

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3. This chart shows President Moon’s approval ratings.
 
Source: Morning Consult  
 
4. New Zealand’s service activity index hit the highest level in over a decade.
 

 
5. Here is the vaccination progress across Asia-Pacific.
 
Source: ING  

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China

1. April industrial production was roughly in line with expectations.
 

 
However, retail sales were disappointing. Are higher prices becoming a drag (similar to the US)?
 

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2. Foreign direct investment has been strong this year.
 

 
3. Home price appreciation is grinding higher.
 

 
4. Domestic rating companies are starting to do their job, …
 
Source: @DiMartinoBooth, @financialtimes   Read full article  
 
… as local bond defaults soar.
 
Source: @business   Read full article  

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5. Shipping costs continue to surge.
 

 
6. Encouraged by Beijing, the number of semiconductor startups jumped last year.
 
Source: @financialtimes   Read full article  

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Emerging Markets

1. Let’s begin with India.
 
• Exports are running at multi-year highs.
 

 
• Mobility has deteriorated.
 
Source: @WSJ   Read full article  
 
• Modi’s approval ratings took a hit but are still high.
 
Source: Morning Consult  

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2. The Thai GDP rebound has been stronger than expected but will still take time.
 

 
3. USD/TRY held resistance at 8.5 (the lira strengthened).
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
4. Colombia’s Q1 GDP surprised to the upside.
 

 
Here is the nation’s economic activity.
 

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5. Foreign investors are deserting Russian markets.
 
Source: TS Lombard  
 
6. Alpine Macro expects EM sovereign dollar spreads to remain tight due to macro improvements and a favorable global liquidity backdrop. 
 
Source: Alpine Macro  
 
7. EM stocks have underperformed this year (in dollar terms).
 
h/t @adam_tooze  

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Cryptocurrency

1. Bitcoin is below $45k in response to further comments from Elon.
 
Source: CNBC   Read full article  
 

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2. Here is the total crypto market cap.
 
Source: @WSJ   Read full article  

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Commodities

1. China’s steel prices remain under pressure amid attempts to halt the rally by the authorities.
 

 
Steel margins have been strong, which boosted output.
 
Source: ANZ Research  

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2. Battery demand for some commodities is expected to significantly rise over the next decade.
 
Source: BloombergNEF, III Capital Management  
 
3. Commodities have been reacting strongly to global growth relative to prior years.
 
Source: Arbor Research & Trading  
 
A weaker dollar has been helping to fuel the commodity rise.
 
Source: TS Lombard  

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4. Lower real yields in the US have been supporting gold.
 

 
5. The unprecedented rally in US lumber futures appears to be fading.
 

 
6. The backwardation in US corn futures has been unusual.
 
Source: @DiMartinoBooth, @bopinion   Read full article  

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Energy

1. US rig count is grinding higher.
 

 
And US frac spread showed some improvement as well.
 

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2. June NYMEX natural gas futures are above $3/mmbtu amid forecasts for a heatwave in parts of the country.
 

 
Source: NOAA  

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3. Oil prices have lagged the rise in metal prices over the past year.
 
Source: Danske Bank  

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Equities

1. The “reopening” trade got a boost last week (3 charts).
 

 
Source: Bloomberg   Read full article  
 
Source: The Seattle Times   Read full article  

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2. The correlation between stocks and bonds has risen sharply in recent weeks.
 
h/t @justinaknope  
 
3. Although rare, the S&P 500 tends to perform well after lagging both small-caps and tech stocks.
 
Source: Susquehanna Derivative Strategy  
 
4. Thematic ETFs continue to see outflows.
 
Source: Matthew Bartolini   Read full article  
 
5. Put volume in the ARK Innovation ETF (ARKK) made an all-time high last week, which typically precedes short-term price recoveries (2 charts).
 
Source: Susquehanna Derivative Strategy  
 
Source: Susquehanna Derivative Strategy  

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6. This chart shows the year-to-date S&P 500 performance by sector.
 
Source: S&P Global Market Intelligence  
 
7. Investment managers have pared back their equity exposure.
 
Source: NAAIM  
 
8. Next, we have some updates on retail investor activity.
 
• Options trading since the start of the pandemic:
 
Source: Goldman Sachs, @RobinWigg  
 
• Robinhood app usage and WallStreetBets (Reddit) activity:
 
Source: BofA Global Research, @WallStJesus  
 
• Retail investors as a percentage of large-cap and small-cap trading:
 
Source: BofA Global Research, @WallStJesus  
 
• Total shares traded:
 
Source: Ally Invest  

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Credit

1. The largest high-yield ETF saw some outflows last week.
 
Source: Bloomberg   Read full article  
 
2. This chart shows year-to-date flows across fixed-income categories.
 
Source: BofA Global Research, @WallStJesus  
 
3. Next, we have some data on US bankruptcies for companies with public debt.
 
Source: S&P Global Market Intelligence  

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Global Developments

1. The chart below shows asset classes with the highest fund inflows by year.
 
Source: BofA Global Research, @WallStJesus  
 
2. The US fiscal support has been more generous than other advanced economies.
 
Source: TS Lombard  
 
3. Growth in nonbank financial institutions continues.
 
Source: The Economist   Read full article  

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Food for Thought

1. Google search activity for “worker shortage”:
 

 
2. Consumers obsessively checking their credit score:
 
Source: LendingTree   Read full article  
 
3. Growth in US advertising activity:
 
Source: @axios   Read full article  
 
4. Post-COVID declines in apartment rents:
 
Source: Statista  
 
5. The Gates Foundation investments:
 
Source: Visual Capitalist   Read full article  
 
6. Plans to travel in the next month:
 
Source: CivicScience   Read full article  
 
7. More help for the economy:
 
Source: Morning Consult   Read full article  
 
8. Interest in the Israeli-Palestinian conflict:
 
Source: @chartrdaily   Read full article  
 
9. Vaccine funding:
 
Source: Statista  
 
10. UFO picture resolution:
 
Source: @elonmusk  

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