US women see much faster wage growth this year

The Daily Shot: 19-Oct-21
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Asia – Pacific
• China
• Emerging Markets
• Cryptocurrencies
• Energy
• Equities
• Global Developments
• Food for Thought

The United States

1. Industrial production surprised to the downside, with supply shortages and the impact of Hurricane Ida weighing on output.

Source: Reuters Read full article

• The industrial production index is now well below pre-COVID levels.

• Energy output was soft as the post-hurricane recovery took longer than expected.

• Automobile production tumbled.

• Cooler summer weather depressed utility output, becoming a drag on industrial production.

Source: Pantheon Macroeconomics

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2. Here are a couple of updates on the housing market.

• Homebuilder sentiment jumped this month as buyers returned.

• Year-over-year gains in Zillow’s home price index hit a record high last month.

Source: @Not_Jim_Cramer

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3. Next, we have some data on the labor market.

• Job openings on Indeed continue to climb.

Source: S&P Global Market Intelligence

• Job-hopping has been lucrative lately.

Source: Atlanta Fed

• US women see much faster wage growth this year.

Source: Atlanta Fed

• Construction firms are facing severe labor shortages.

Source: @AliWolfEcon

• Head hunters’ revenues have been rebounding.

Source: Evercore ISI

• Here are the reasons for the lack of urgency in returning to work.

Source: @GregDaco, @nick_bunker, @indeed Read full article

• Weak labor force growth will limit US economic expansion.

Source: CBO

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4. The US Treasury’s cash balances became dangerously low in the debt ceiling impasse.

We are going to revisit this issue later this year.

Source: Oxford Economics

Google searches for “debt ceiling” have been low relative to prior events.

Source: BlackRock

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5. Just as we saw in the U. Michigan report, other indicators point to a deterioration in consumer sentiment.

• Cornerstone Macro’ high-frequency indicator:

Source: Cornerstone Macro

• The HPS-CS Sentiment Index:

Source: ESI Read full article

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Canada

1. Four BoC rate hikes by the end of Q3 of next year? The market is convinced.

2. Consumer confidence continues to ease.

3. Business sentiment surged to a record high, according to a BoC survey. Businesses see sales growth moderating, but CapEx and hiring expectations hit new highs.

Source: Reuters Read full article

• Production bottlenecks and labor shortages have become acute in some sectors.

• Companies see much higher inflation ahead.

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3. Housing starts are moderating, …

… as affordability increasingly becomes an issue.

Source: @GregDaco

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4. The rate differential with the US should be a tailwind for the loonie.

Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital

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The United Kingdom

1. A historic rate dislocation took place on Monday as the market repriced BoE rate hike expectations.

Source: Reuters Read full article

• The 2yr gilt:

• Short-term rate futures (yield):

• The probability of 2 rate hikes before the end of the year:

Similar to the US, the market expects the BoE to hike more aggressively to tame inflation – slowing economic growth in the process. The curve has flattened.

Source: @TheStalwart Read full article

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2. UK inflation expectations are outpacing other economies (2 charts).

Source: Cornerstone Macro

Source: MRB Partners

Will the recent rally in the pound dampen inflation expectations?

Source: BCA Research

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The Eurozone

1. Economists are boosting inflation forecasts.

2. The CPI – PPI spread has blown out, which could squeeze corporate profit margins in some sectors.

Source: TS Lombard

Gas and electricity prices have a higher contribution to Italy and Spain’s headline inflation versus Germany and France.

Source: TS Lombard

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Europe

1. Poland’s inflation was revised higher.

Bond yields continue to surge.

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2. Gas prices remain elevated amid tight inventories.

Source: Pantheon Macroeconomics

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3. Earnings have rebounded.

Source: Pantheon Macroeconomics

But autos and financials are expected to drag Q3 earnings growth lower.

Source: Deutsche Bank Research

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Asia – Pacific

1. The won is rebounding.

2. Aussie-yen is rallying as global risk appetite returns.

3. Australia’s consumer confidence continues to recover.

The market expects a series of RBA rate hikes in the months ahead.

Back to Index

China

1. The PBoC says that the property developers’ credit risk is manageable. After a couple of developers paid their coupon, risk aversion eased somewhat, and yields on some leveraged firms’ debt declined.

The renminbi rallied.

Tech stocks in Hong Kong are testing resistance.

Source: @TheTerminal, Bloomberg Finance L.P.

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2. Here are some additional trends in China’s real estate markets.

• Housing sales have been soft.

Source: DBS

Source: @WSJ Read full article

• Historically, residential credit cycles don’t have happy endings. Will China be different?

Source: TS Lombard

• Will US-dollar Evergrande debt investors get a lower recovery in favor of domestic bondholders?

Source: CreditSights

• This chart shows the elevator and escalator (E&E) market over time.

Source: Morgan Stanley Research; @benedictevans

• Near-record share of property loans in China has been outside the formal banking system.

Source: China Beige Book

• For the first time in a decade, loans to developers in China declined.

Source: Gavekal Research

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3. Thermal coal prices continue to surge.

• China doesn’t have enough energy to support the latest surge in exports.

Source: BCA Research

• This chart shows the ratio of coal inventories to total exports.

• Power production surged in September.

Source: Pantheon Macroeconomics

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4. Steel production has slowed sharply.

Source: @C_Barraud

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Emerging Markets

1. USD/IDR is at support (the Indonesian rupiah is strengthening).

h/t Michael G Wilson, @TheTerminal, Bloomberg Finance L.P.

2. Gulf countries are recovering as energy prices surge.

Source: @IIF Read full article

3. The Pakistani rupee depreciation continues.

4. Social media users are less upbeat on EM equities.

Source: SentimenTrader

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Cryptocurrencies

1. CME bitcoin futures open interest surged to record highs last week.

Source: CoinDesk Read full article

2. Crypto fund assets under management reached an all-time high of around $72.3 billion.

Source: CoinShares Read full article

Bitcoin funds dominated inflows last week.

Source: CoinShares Read full article

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3. The total cryptocurrency market cap reached an all-time high near $2.5 trillion.

Source: CoinDesk Read full article

4. Similar to equities, bitcoin is entering a seasonally strong period.

Source: @topdowncharts

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Energy

1. Fund managers are overweight energy.

Source: BofA Global Research; @Callum_Thomas

2. Spending on oil has been relatively low in recent years.

Source: MRB Partners

3. Inventories at Cushing, OK (NYMEX WTI settlement hub) are near the recent lows.

Source: @jessefelder, @markets Read full article

Goldman sees the energy market (oil and refined products) moving deeper into deficit in the months ahead.

Source: Goldman Sachs; @HFI_Research

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Equities

1. Fund managers boosted cash holdings this month, …

Source: BofA Global Research; @Callum_Thomas

… as sentiment deteriorated. It’s a bullish sign for stocks.

Source: @ISABELNET_SA

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2. Profit margins will dip before rebounding next year.

Source: @FactSet Read full article

Source: @jessefelder; BofA Global Research Read full article

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3. The S&P 500 declined from the top of its long-term trend channel, but recently held support above the midpoint.

Source: Deutsche Bank Research

4. The S&P 500 is entering a seasonally strong period.

Source: @topdowncharts

5. Will a flatter yield curve drive small-cap underperformance?

Source: @MrBlonde_macro

6. The SPDR consumer discretionary ETF (XLY) is breaking out relative to the SPDR consumer staples ETF (XLP).

Source: Dantes Outlook

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Global Developments

1. The US dollar is down as risk aversion moderates.

2. Lockdowns are easing globally.

Source: Oxford Economics

3. What were the sources of government debt financing in 2020?

Source: IIF

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Back to Index

Food for Thought

1. Consumers having trouble purchasing items:

Source: @financialtimes Read full article

2. Physical cash as a payment method:

Source: Alpine Macro

3. Land and buildings owned by US public companies:

Source: @WSJ Read full article

4. US defense vs. non-defense discretionary spending:

Source: BCA Research

5. COVID vs. other causes of death in the US:

Source: Peterson-KFF Health System Tracker Read full article

6. Downloads among top ten social media apps:

Source: The Washington Post Read full article

7. Internet speeds:

Source: Visual Capitalist Read full article

8. Lithium-ion battery production expectations:

Source: The Washington Post Read full article

9. Netflix content spending:

Source: @chartrdaily

10. Each author’s second book vs. first book ratings:

Source: @_rospearce Read full article

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