The Daily Shot: 16-Sep-21
• China
• Asia – Pacific
• The Eurozone
• Europe
• The United Kingdom
• Canada
• The United States
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Rates
• Food for Thought
China
1. Investors in shares of property developers are in capitulation mode.
Source: @tracyalloway, @SofiaHC1 Read full article
Source: @WSJ Read full article
• Investors have been concerned that the sector’s credit risks will spread beyond Evergrande.
Source: Reuters Read full article
• Bloomberg’s index tracking lower-rated USD-denominated debt shows yields surging.
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2. The authorities are initiating a regulatory overhaul of the gaming industry in Macau.
Source: Reuters Read full article
Casino stocks plummetted.
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3. The number of regulatory actions coming out of Beijing has been climbing. China’s capital markets will be scarred by these actions for years to come, with substantial valuation discounts becoming a permanent feature.
Source: @MichaelKantro, @NancyRLazar1
4. Thermal coal futures continue to surge amid shortages and soaring LNG prices.
5. China’s benchmark equity index is at support.
Source: @TheTerminal, Bloomberg Finance L.P.
Consumer and real estate stocks have contributed to lower earnings momentum this year.
Source: MRB Partners
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6. Local government bond issuance strengthened in recent months.
Source: Pantheon Macroeconomics
7. The “phase-1” trade deal with the US is in bad shape.
Source: @WSJ Read full article
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Asia – Pacific
1. North Korea’s renewed missile testing will boost the won’s volatility.
Source: BCA Research
2. New Zealand’s second-quarter growth surprised to the upside. The GDP was nearing its pre-pandemic trend before the latest infection scare.
3. Australia’s labor market was hit by the lockdowns.
Source: ING
• Hours worked declined.
• The labor force participation rate dropped sharply.
• With fewer Australians looking for work, the unemployment rate declined more than expected.
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The Eurozone
1. Industrial production climbed above pre-COVID levels in July.
2. European manufacturing is strongly linked to China. The Chinese credit impulse leads by about nine months, signaling a slowdown ahead.
Source: BCA Research
3. Material/equipment shortages are most acute in Germany.
Source: Oxford Economics
Here is the breakdown by sector (for the EU).
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
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4. Labor costs continue to trend higher, but the year-over-year figures were distorted by last year’s “noisy” data.
5. Eurozone labor and supply strains continue to affect many industries.
Source: Longview Economics
6. Here are the latest betting market odds for Germany’s upcoming election.
Source: @PredictIt
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Europe
1. Sweden’s CPI rebounded last month.
2. Here is a look at poverty rates in Europe.
Source: Eurostat Read full article
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The United Kingdom
1. The CPI report surprised to the upside.
The biggest year-over-year gains were due to base effects in the restaurant sector (reversal of the government subsidies effect).
The retail price index is just returning to the pre-COVID trend.
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2. Home price appreciation retreated in July after the stamp duty holiday on high-end properties ended.
3. Here is a summary of labor shortages in the UK.
Source: @OxfordEconomics Read full article
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Canada
1. Inflation continues to surge.
And it’s not just due to base effects. This chart shows the monthly changes (3-month average).
Source: Scotiabank Economics
• Core inflation has been accelerating as well.
Source: Desjardins
• Inflation breadth is on the rise.
Source: Desjardins
• This chart shows goods vs. services CPI.
Source: Scotiabank Economics
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2. Will the CPI report impact the elections?
Source: Reuters Read full article
• The latest polls:
Source: CBC/Radio-Canada
• The betting markets:
Source: @PredictIt
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3. We’ve had five months of consecutive declines in existing home sales, as massive price gains take their toll.
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The United States
1. Industrial production was weaker than expected last month, partially due to Hurricane Ida.
Manufacturing output remains above pre-COVID levels.
Source: Oxford Economics
Here is the capacity utilization.
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2. The first regional manufacturing report of the month (from the NY Fed) was remarkably strong.
– Employment and hours worked indicators:
– CapEx expectations:
• Factories are using their pricing power.
• Supply-chain bottlenecks remain acute.
– Unfilled orders:
– Supplier delivery times:
Given the weakness in China, the region’s factory activity is likely to moderate.
Source: Pantheon Macroeconomics
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3. Next, we have some additional data from the CPI report.
– Used and new cars CPI (month-over-month):
– Car parts:
– Hospital services:
– Rent:
Source: Nomura Securities
Economists expect housing-related inflation – rent and owners’ equivalent rent (OER) – to surge going forward.
– Apartment rent data:
Source: @MikaelSarwe
– Housing prices:
Source: @AndreasSteno
Source: ING
– Forecasts:
Source: Dallas Fed Read full article
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4. There is a great deal of talk about stagflation in the news.
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Emerging Markets
1. Brazil’s economic activity is back on its pre-COVID trend.
2. Colombia’s manufacturing output hit a new high.
3. Indonesia’s trade surplus rose to a new record last month.
Source: Hellenic Shipping News Read full article
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4. South Africa’s retail sales tumbled in July amid riots and tight COVID restrictions.
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Cryptocurrency
1. The $50K BTC strike price, a key resistance level, has the largest options open interest ahead of next week’s quarterly expiration.
Source: Skew
2. Bitcoin’s stablecoin supply ratio (SSR), which measures the cryptocurrency’s supply relative to the total supply of stablecoins denoted in BTC, is starting to rise. Some analysts believe a low/rising SSR means stablecoins have increasing buying power, used to acquire more BTC.
Source: Glassnode
3. Here are the largest stablecoins by market value.
Source: Fitch Ratings
4. Grayscale’s Bitcoin Trust (GBTC) discount continues to widen amid dim hopes of a spot bitcoin ETF approval.
Source: Skew
Source: CoinDesk Read full article
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5. Insider trading was spotted at OpenSea, an NFT marketplace, as employees allegedly purchased items that they knew were set to display on the front page before publication.
Source: CoinDesk Read full article
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Commodities
1. The iron ore drawdown is approaching 50%.
2. Rhodium prices tumbled this week.
3. A recovery in the dollar could lead to a pullback or consolidation in commodities (2 charts).
Source: Fitch Solutions Macro Research
Source: Fitch Solutions Macro Research
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Energy
1. Crude oil futures (both Brent and WTI) are at the upper Bollinger Band.
2. US oil output remained depressed last week.
3. Total oil and products in storage continue to trend lower.
Source: @HFI_Research
4. Heating is going to be expensive this winter as propane prices surge.
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Equities
1. Once again, the S&P 500 held support at the 50-day moving average.
The S&P 500 is near the top end of its long-term trend channel.
Source: Deutsche Bank Research
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2. Small caps have been stuck in a range.
3. Which factors will drive returns in the next 30 days?
Source: @IHSMarkitPMI
4. US equities have significantly outperformed global peers in recent years.
Source: Mizuho Securities USA
5. Valuations are typically high coming out of recessions but compress as the cycle continues.
Source: Deutsche Bank Research
6. Will the tech sector price gains accelerate?
Source: Alpine Macro
7. Fund managers are less hedged.
Source: BofA Global Research; @Callum_Thomas
8. Retail investors appear to be turning cautious.
9. The SPAC boom is over for now.
Source: @WSJ Read full article
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Rates
1. The longer end of the Treasury curve has been flattening.
2. Hedge funds have started shorting Treasuries again.
Source: Bloomberg Read full article
3. Where will the 10yr Treasury yield be in three months? Twelve months?
Source: Deutsche Bank Research
4. Treasury bills that mature in October and November yield more than bills maturing in September or December, but the difference is small. This suggests investors perceive some risk of US default as the deadline to extend the debt ceiling approaches next month.
Source: Cornerstone Macro
Treasury bill yields rose by almost 20 basis points during the 2011 debt ceiling debacle.
Source: Cornerstone Macro
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Food for Thought
1. The US liquor store boom:
Source: Placer.ai
2. GameStop weekly visits:
Source: Placer.ai
3. Top 10 cloud vendors globally by total revenue (Q1 2021):
Source: stockapps.com Read full article
4. The 2024 Republican presidential nomination odds in the betting markets:
Source: @PredictIt
5. Job postings requiring vaccinations:
Source: @GregDaco, @Indeed, @AE_Konkel Read full article
6. Coal-fired power plant pipeline:
Source: @axios Read full article
7. Air-conditioning use in select countries:
Source: The Economist Read full article
8. Long-lasting cognitive impairments among some COVID patients:
Source: The Economist Read full article
9. The world’s best-selling drugs:
Source: @bopinion Read full article
10. Using perfume regularly:
Source: Statista
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