The Daily Shot: 29-Jun-21
• The United States
• Canada
• The United Kingdom
• The Eurozone
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. Perceived labor market slack is part of the reason for the Fed’s reluctance to begin withdrawing stimulus.
Source: Nordea Markets
Is it possible that the central bank is misreading the chart above? While some workers will reenter the labor market, there is a chance that many will not. Yes, more Americans are returning to work as states end emergency unemployment benefits (2 charts).
Source: Arbor Research & Trading
Source: Morgan Stanley Research; @Scutty
But it is entirely possible that the labor market will remain tight, with full employment returning much faster than the Fed expected. Economic growth could surprise to the upside, …
Source: MRB Partners
… pushing the output gap deep into positive territory.
Source: MRB Partners
And we could be looking at full employment as soon as Q1 of next year (2 charts).
Source: Cornerstone Macro
Source: BCA Research
Moreover, if we see more fiscal stimulus (2 charts) …
Source: Scotiabank Economics
Source: @ISABELNET_SA, @GoldmanSachs
… labor shortages will become more acute.
Source: Morgan Stanley Research
• This chart shows the share of job postings offering hiring incentives. It was trending up even before the pandemic.
Source: @AE_Konkel, @indeed, h/t @GregDaco Read full article
• CEO hiring plans have not been this high in two decades – perhaps longer.
Source: Cornerstone Macro
• The US central bank may well find itself behind the curve later this year as wage growth accelerates (2 charts).
Source: Mizuho Securities USA
Source: Cornerstone Macro
For example, here is the “wages and benefits” index for the Texas-area manufacturing sector.
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2. The Dallas Fed’s manufacturing index came off the highs in June.
• Many companies continue to report growing unfilled orders.
• Workers are busy.
• Firms are reporting higher vendor delivery times.
• Price pressures continue to grow.
• Texas-area factories are extremely confident about future business activity.
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3. Americans are increasingly optimistic about the COVID situation.
Source: Gallup Read full article
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Canada
1. Small and medium-size business sentiment hit the highest level in over a decade.
2. Canadian stocks are trading at a deep discount to the US.
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
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The United Kingdom
1. The CBI retail sales index climbed further this month.
Source: Reuters Read full article
As a result, we should see more gains in the official retail sales data.
Source: Pantheon Macroeconomics
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2. The UK has a high housing price-to-rent ratio relative to its peers.
Source: TS Lombard
While UK home prices are up significantly on the national level, inner London has underperformed as residents flock to the suburbs.
Source: TS Lombard
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3. Market-based inflation expectations are higher than in the US and the Eurozone.
Source: Gavekal Research
4. Vaccinations are outperforming the US.
Source: Pantheon Macroeconomics
But COVID cases are on the rise.
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The Eurozone
1. Germany’s import prices are surging.
2. This chart shows the composition of the ECB’s balance sheet.
Source: ECB Read full article
• Here are the PEPP (emergency QE) purchases by country.
Source: ECB Read full article
• Analysts expect QE to remain robust next quarter.
Source: Barclays Research
• The TLTRO program has been popular with banks (2 charts).
Source: ECB Read full article
Source: ECB Read full article
3. How has QE impacted bond yields?
Source: Barclays Research
4. Spain’s mortgage activity remains tepid relative to the housing bubble levels.
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China
1. The World Economics SMI report shows manufacturing growth strengthening this month. Price pressures accelerate.
Source: World Economics
2. Retailers have been struggling in the second quarter, according to China Beige Book.
Source: @tracyalloway, @ChinaBeigeBook
3. The rebound in hog prices points to higher inflation ahead.
h/t John Liu
4. The vaccination program has been going strong.
Source: Pantheon Macroeconomics
5. This chart shows China’s total debt-to-GDP ratio.
Source: @acemaxx, @CNBC Read full article
6. Hong Kong’s exports remain robust.
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Emerging Markets
1. Let’s begin with some updates on Vietnam.
• Q2 GDP growth (below consensus):
• Inflation (below consensus):
• Exports (a modest rebound in June):
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2. South Africa’s consumer sentiment deteriorated this month.
The current account surplus has been surging on strong exports.
Source: @financialtimes Read full article
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3. Russia’s consumer confidence is grinding higher.
4. India’s consumer confidence hit an all-time low.
Source: @adam_tooze, @FT Read full article
5. Colombia’s central bank did not hike rates despite stronger inflation.
Source: Bloomberg Read full article
6. Mexico’s trade balance deteriorated in May.
7. Brazil’s loan growth hit 16%.
8. Pedro Castillo Terrones, the president-elect of Peru, decided to keep the current central banker (surprising the markets).
Source: Twitter
The bonds and the Peruvian sol jumped.
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Cryptocurrency
1. Bitcoin continues to outperform.
2. There has been a significant decline in Bitcoin network activity this year (2 chats).
Source: @glassnode
Source: Blockchain.com
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3. Have sellers capitulated? This chart shows record losses last week – realized when coins purchased higher are spent at lower prices, according to Glassnode.
Source: @glassnode
4. Bitcoin’s current drawdown is about half of the previous bear market’s drop from peak to trough in 2018-2019.
Source: Koyfin
5. Here is the evolution of the total crypto market cap vs. 2017/2018.
Source: @ISABELNET_SA, @jpmorgan
6. Bitcoin miner revenue has collapsed during the crypto sell-off.
Source: Glassnode Read full article
7. Everybody wants to have a Bitcoin ETF.
Source: CoinDesk Read full article
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Commodities
1. US steel prices are surging.
2. Speculative accounts have been easing their bets on corn.
Source: @kannbwx
3. Global food producers are struggling with rising input prices.
Source: IMF Read full article
4. The ratio of US lumber orders to lumber production has collapsed.
Source: Cornerstone Macro
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Energy
1. Brent held resistance at the upper Bollinger Band.
2. Demand has been the key driver of Brent price gains, according to the NY Fed.
Source: NY Fed
3. US natural gas futures are surging, …
… as exports accelerate.
Source: Fitch Solutions Macro Research
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Equities
1. The S&P 500 is at the upper Bollinger Band. Will we see a pullback?
h/t Nancy Moran
2. Positive earnings surprises are expected to continue for the Q2 reporting season.
Source: @ISABELNET_SA, @JPMorganAM
Earnings have become the main driver of global equity returns after price-to-earnings expansion drove the initial rebound.
Source: Barclays Research
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3. Sustaining margin growth will be critical.
Source: @GinaMartinAdams Read full article
4. The most-shorted stocks continue to outperform.
5. Next, we have some sector updates.
• Communication Services:
Source: CNBC Read full article
Source: CNBC Read full article
• Tech:
• Semiconductors:
Source: CNBC Read full article
• Energy:
• Metals & Mining:
• Leisure/entertainment:
Source: Forbes Read full article
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6. Here are some popular thematic portfolios.
• Sports betting:
• Clean energy:
• Inflation-sensitive stocks:
• Post-IPO shars:
• ARK Innovation:
– ARK Genomic Revolution:
Source: Science Read full article
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7. Several meme stocks rallied on Monday.
8. Mutual funds have been underinvested in tech mega-caps, …
Source: Goldman Sachs; @themarketear
… missing the rally.
Source: @axios Read full article
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9. Tech funds saw some outflows recently.
Source: @ISABELNET_SA, @BofAML
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Credit
1. US high-yield spreads continue to hit record lows.
2. Spreads on mortgage-backed securities (MBS) have widened in recent weeks due to heavy supply and increased concerns about a Fed taper, according to Barclays.
Source: Barclays Research
Barclays expects MBS net issuance to decline and banks to remain considerable buyers this year, which could keep spreads tight relative to historical levels (2 charts).
Source: Barclays Research
Source: Barclays Research
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Global Developments
1. Global container shipping rates continue to surge.
Source: @benbreitholtz
Dry bulk shipping costs are also at multi-year highs.
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2. Here is the relative performance of equity markets around the world.
Source: BCA Research
3. Inflation-friendly assets suffered the first weekly outflow since November 2020.
Source: Arbor Research & Trading
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Food for Thought
1. Expected changes in the mix of occupations:
Source: McKinsey Read full article
2. Unpaid jobless claims:
Source: @BW Read full article
3. 5G growth globally:
Source: CCS Insight Read full article
4. Battery prices:
Source: @bbgvisualdata Read full article
5. Gender fluidity:
Source: Morning Consult Read full article
6. Different ways hate is experienced:
Source: @axios Read full article
7. US church membership:
Source: Gallup Read full article
8. Confederate monuments:
Source: @axios Read full article
9. When a car alarm goes off:
Source: SquareCirclez
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