Posted on by The Daily Shot Editor: Lev Borodovsky

US prime-age population has been flat since 2007

The Daily Shot: 07-Jun-21
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Asia – Pacific
• China
• Emerging Markets
• Cryptocurrency
• Equities:
• Global Developments
• Food for Thought

 

The United States

1. The May jobs report came in below economists’ forecasts.
 

 
As we saw last month, there is no shortage of demand for labor. Instead, job growth is constrained by supply, …
 
Source: ING  
 
… which is pushing wages higher in some sectors (2 charts).
 
Source: Jeffrey Sparshott, @WSJ   Read full article  
 
Source: BofA Global Research  
 
Nonetheless, bond yields and the dollar reversed Thursday’s gains.
 

 

——————–

 
• The unemployment rate dipped below 6%.
 

 
Cornerstone Macro expects the labor market to keep tightening, with the unemployment rate hitting 2.9% by the end of next year.
 
Source: Cornerstone Macro  
 
• Long-term unemployment appears to have peaked.
 

 
• The labor force participation rate remains depressed (2 charts).
 

 
Source: Jeffrey Sparshott, @WSJ   Read full article  
 
• Below are some additional labor-market trends.
 
– Hours worked:
 
Source: Jeffrey Sparshott, @WSJ   Read full article  
 
– Lost payrolls vs. job openings:
 
Source: Morgan Stanley Research  
 
– Teen employment:
 
Source: The Washington Post   Read full article  
 
– Teen unemployment (lowest since 1953):
 
Source: Jeffrey Sparshott, @WSJ   Read full article  
 
– Employment recovery by wage category:
 
Source: Morgan Stanley Research  
 
– Job gains by sector (the loss in construction jobs was all in the non-residential sector):
 
Source: Scotiabank Economics  
 
Source: @bbgvisualdata   Read full article  
 
– Current payrolls vs. the 2008 recovery:
 
Source: Mizuho Securities USA  
 
… and vs. the pre-COVID trend:
 
Source: Pantheon Macroeconomics  
 
Will deteriorating demographics (aging population, low birth rates, and low immigration rates) keep US job gains from ever reaching the pre-COVID trend?
 
Source: @GregDaco  

——————–

 
2. The prime-age population has been flat since 2007.
 

 
3. Consumer spending is still near 20% higher than 2019 levels.
 
Source: BofA Global Research  
 
4. The partisan gap in consumer confidence remains wide.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
5. High-frequency indicators continue to trend up.
 
Source: Morgan Stanley Research  
 
6. April factory orders hit the highest level since early 2014.
 

 
7. Next, we have some updates on the housing market.
 
• Condo vs. single-family unit home price appreciation:
 
Source: Black Knight Technologies  
 
• Home price appreciation by state:
 
Source: Black Knight Technologies  
 
• The home-price-to-rent ratio:
 
Source: Calculated Risk  
 
• Home price appreciation by price category:
 
Source: @LizAnnSonders, @Redfin  

Back to Index

 

Canada

1. The May employment report was disappointing.
 

 
The unemployment rate ticked higher again.
 

 
And the participation rate declined.
 

 
Here are the changes by sector.
 
Source: Oxford Economics  

——————–

 
2. The Ivey PMI shows that business activity remained robust in May.
 

 
3. The BoC has funded nearly the entire budget deficit.
 
Source: @RichardDias_CFA  
 
4. Canada has become the global leader in vaccinations.
 
Source: ING  

Back to Index

 

The United Kingdom

1. Construction activity accelerated in May.
 

 
But construction input costs are soaring.
 
Source: @samueltombs  

——————–

 
2. New car registrations remain weak, now running below 2012 levels.
 

Back to Index

 

The Eurozone

1. Retail sales declined in April and are well below the pre-COVID trend.
 

 
Here is the gap with online sales.
 
Source: Pantheon Macroeconomics  
 
 
2. The ECB’s securities purchases have accelerated.
 
Source: @fwred  
 
Will the central bank maintain the current pace through the end of the program?
 
Source: @fwred  

——————–

 
3. Next, we have some updates on Germany.
 
• Construction activity continues to shrink (PMI < 50).
 

 
• German car output deteriorated in May as a result of chip shortages.
 
Source: Commerzbank Research  
 
• Most Germans are not too concerned about sustainable shipping.
 
Source: ecommerceDB   Read full article  

——————–

 
4. Here is a forecast for Italy’s GDP growth from Oxford Economics (NGEU = EU’s recovery plan).
 
Source: Oxford Economics  
 
5. This scatterplot shows public budget balance vs. public debt.
 
Source: Barclays Research  

Back to Index

 

Europe

1. European equity funds are enjoying significant capital inflows.
 
Source: Deutsche Bank Research  
 
2. Sweden’s services PMI hit a new high.
 

 
3. About a third of European bank credit is exposed to potential losses as a result of climate change.
 
Source: ECB  
 
4. This chart shows new cars per 1,000 inhabitants:
 
Source: @ACEA_auto  
 
5. Next, we have some data on healthcare costs.
 
Source: McKinsey & Company  
 
6. What will be the impact of the EU’s recovery plan on the GDP (and how will the funds be spent – 3 charts)?
 
Source: Danske Bank  
 
Source: Danske Bank  
 
Source: Danske Bank  

——————–

 
7. Here is the European Regional Social Progress Index.
 
Source: Gallup   Read full article  

Back to Index

 

Asia – Pacific

1. Singapore’s retail sales remain below pre-COVID levels.
 

 
2. Job ads are surging in Australia, pointing to lower unemployment ahead.
 

 
Source: ANZ Research  

Back to Index

 

China

1. Exports were weaker than expected last month.
 

 
2. A decline in China’s social financing typically coincides with a slowdown in manufacturing activity and lower commodity prices.
 
Source: Quill Intelligence  
 
3. Credit spreads have tightened.
 
Source: @DavidInglesTV  
 
4. China’s nuclear power capacity remains relatively low.
 
Source: Barclays Research  
 
5. Here is the ratio of urban workers’ income and consumption to that of rural workers.
 
Source: IMF   Read full article  
 
6. Hong Kong’s home price appreciation has stalled.
 
Source: @RichardDias_CFA  
 
7. Hong Kong’s IPO activity had the worst month since 2009.
 
Source: @markets   Read full article  

Back to Index

 

Emerging Markets

1. Brazil’s service sector contraction slowed in May.
 

 
Core inflation remains relatively low.
 
Source: @macro_daily  

——————–

 
2. Mexico’s vehicle production is moving in the wrong direction.
 

 
3. Here are some updates on Russia.
 
• Car sales (at 2018 levels):
 

 
• Wage growth:
 

 
• The 2yr bond yield (pricing in more hikes):
 

——————–

 
4. The South African rand continues to rally.
 

Back to Index

 

Cryptocurrency

1. Bitcoin has been consolidating.
 

 
2. It’s been a good year for NFTs.
 
Source: @financialtimes, h/t @ISABELNET_SA   Read full article  

Back to Index

 

Equities:

1. Meme stocks widened the Russell 2000 Value outperformance over growth.
 

 
2. Stocks most correlated with Treasuries (those that expect substantial earnings growth far in the future) trade at record premiums to the rest of the market.
 
Source: Empirical Research Partners, @RBAdvisors  
 
3. Equity-bond correlations tend to turn positive during periods of high inflation.
 
Source: @ISABELNET_SA, @GoldmanSachs  
 
4. Equity positioning remains stretched.
 
Source: Deutsche Bank Research  
 
• There are several other warning signs for equities, according to BCA Research (2 charts).
 
Source: BCA Research  
Source: BCA Research  
 
Here is Morgan Stanley’s Market Timing Indicator.
 
Source: @Not_Jim_Cramer  

——————–

 
5. The most-shorted US stocks surged with the latest meme share rally.
 

 
Cornerstone Macro expects the most shorted stocks to underperform.
 
Source: Cornerstone Macro  

——————–

 
6. This chart shows risky vs. safe assets’ fund flows.
 
Source: @ISABELNET_SA, @GoldmanSachs  
 
7. Online search activity has turned bearish.
 
Source: Arbor Research & Trading  
 
8. Growth stocks are have been underperforming after deviating far above trend (2 charts).
 
Source: Deutsche Bank Research  
 
Source: Deutsche Bank Research  
 
Deutsche Bank expects further underperformance of growth stocks this year.
 
Source: Deutsche Bank Research  
 
However, growth stocks now appear oversold relative to value stocks.
 
Source: MRB Partners  

——————–

 
9. Financials are trading in line with 2009-2010, which suggests a period of weakness relative to the S&P 500.
 
Source: BCA Research  
 
For now, financials are supported by a steepening yield curve.
 
Source: MRB Partners  

——————–

 
10. Cybersecurity firms are lagging despite all the recent ransomware attacks.
 
h/t Cormac Mullen   
 
11. ARK Innovation entered a death cross.
 
h/t @Tobin_Tweets  

Back to Index

 

Global Developments

1. Are the bets against the US dollar becoming stretched?
 
Source: Longview Economics  
 
2. Which countries saw the highest home price appreciation recently?
 
Source: @jessefelder, Bloomberg   Read full article  
 
3. This chart shows how each country’s economy compares to pre-COVID levels.
 
Source: @financialtimes   Read full article  
 
4. The global composite PMI points to robust GDP growth in Q2
 
Source: IHS Markit  
 
5. Finally, we have central banks’ government debt holdings as a share of outstanding debt.
 
Source: FTSE Russell   Read full article  

——————–

Back to Index

 

Food for Thought

1. Tax revenues as a share of GDP:
 
Source: @adam_tooze, @TheEconomist   Read full article  
 
2. Corporate tax rates in 2000 and 2020:
 
Source: @SteveRattner  
 
• US top and effective corporate tax rate:
 
Source: BCA Research  

——————–

 
3. US individuals audited by the IRS:
 
Source: @WSJ   Read full article  
 
4. Remote work by age (2 charts):
 
Source: Deutsche Bank Research  
 
Source: CivicScience   Read full article  
 
5. Hybrid work:
 
Source: McKinsey   Read full article  

——————–

 
6. The labor force participation gap by country:
 
Source: Moody’s Analytics  
 
7. US concerns about catching COVID:
 
Source: Gallup   Read full article  
 
8. Vaccine funding:
 
Source: Statista  
 
9. Brood X cicadas emerging this year:
 
Source: Vox   Read full article  

——————–

Back to Index