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.
 


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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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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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