The Daily Shot: 03-Nov-21
• The United States
• Canada
• The United Kingdom
• Europe
• Asia – Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Alternatives
• Rates
• Global Developments
• Food for Thought
The United States
1. Let’s begin with the labor market.
• Homebase small business employment data point to substantial job gains in October.
Source: Pantheon Macroeconomics
– The market consensus is a gain of 450k, according to Bloomberg.
– Here is a forecast from Oxford Economics.
Source: @GregDaco
– The range of expectations for October is the tightest since the start of the pandemic.
Source: @benbreitholtz
• This chart shows the quit rate (voluntary departures) for government vs. private workers.
Source: FRED
• Employment for college grads has fully recovered.
Source: TS Lombard
• Labor productivity picked up momentum since the start of the pandemic.
Source: Desjardins
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2. The latest capital expenditure recovery has been the strongest since the 1940s (boosting productivity).
Source: Morgan Stanley Research
3. US vehicle sales appear to have stabilized.
4. According to Pantheon Macroeconomics, the core CPI is set to accelerate next year.
Source: Pantheon Macroeconomics
Rent and owners’ equivalent rent …
Source: JP Morgan Research
… as well as used vehicle prices are expected to strongly contribute to the core CPI gains.
Source: JP Morgan Research
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Canada
1. Building permits jumped in September.
2. Over half of the CPI basket components have annual variations above 3%.
Source: Desjardins
3. Here is the number of BoC hikes priced into the market.
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
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The United Kingdom
Both Barclays and the BoE forecast inflation to surpass the 4% upper-bound set by the central bank by the end of the year …
Source: Barclays Research
…which could signal the beginning of rate hikes.
Source: Barclays Research
But markets see the BoE overshooting on rate hikes, having to backtrack later.
Source: BCA Research
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Europe
1. Italian manufacturing growth accelerated in October, bucking the trend we see at the Eurozone level.
Source: IHS Markit
Source: IHS Markit
Separately, Italian car registrations are at multi-year lows (for this time of the year).
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2. Sustainable financial products make up less than 10% of their respective markets in the euro area, but green capital markets are growing rapidly.
Source: ECB Read full article
3. Swiss inflation continues to rebound.
Swiss retail sales are back above the pre-COVID trend.
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Asia – Pacific
1. Let’s begin with Australia.
• The RBA bowed to market pressure, giving up yield targeting. But the central bank struck a dovish tone, indicating that it will be patient on rate hikes.
Source: Bloomberg Read full article
The Aussie dollar and bond yields fell.
• Private-sector residential building approvals tumbled in September.
Source: The Bull Read full article
• This chart shows the trajectory of Australia’s labor force vs. the US.
Source: ING
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2. New Zealand’s Q3 employment report was remarkably strong.
• Employment gains:
• The unemployment rate:
• Labor force participation:
Separately, New Zealand’s home price gains are approaching 30%.
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3. Next, we have semiconductor output as a share of GDP for select economies.
Source: Deloitte Read full article
4. Speculative accounts continue to boost their bets against the yen (often as part of a carry trade).
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China
1. Markit’s PMI index showed further improvement in service-sector growth.
2. The selloff in developers’ bonds continues.
• Property developer debt total return:
Source: Truist Advisory Services
• The overall HY index:
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3. China’s stocks continue to underperform.
Tech shares in Hong Kong are struggling.
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4. What share of China’s corporate revenues comes from abroad?
Source: Bruegel Read full article
5. Bloomberg’s renminbi index continues to grind higher (vs. a basket of currencies).
6. Next, we have a couple of updates from Hong Kong.
• Business growth moderated further in October.
Source: IHS Markit
• Retail sales remain soft.
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Emerging Markets
1. Let’s begin with Chile.
• Economic growth has been surging.
• Industrial production remains at multi-year highs (for this time of the year).
• Retail sales have been exceptional.
• Copper production deteriorated in September due to labor strikes.
Source: Bloomberg Read full article
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2. Mexico’s GDP declined in Q3.
• Manufacturing activity is struggling to return to growth.
Source: IHS Markit
• Remittances remain robust.
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3. Latin American equities have lagged the broader EM basket over the past year.
Source: Variant Perception
Brazil’s equity market could see further downside before stabilizing, according to the 2015 analog.
Source: Variant Perception
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4. South Africa’s manufacturing growth slowed in October.
5. India’s stocks have massively outperformed peers since July.
Has the market overshot?
Source: BCA Research
Separately, India’s tax revenues have surpassed budget expectations.
Source: JP Morgan Research
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6. Unlike previous occasions, EM spreads did not respond to central bank taper talks this year.
Source: IIF
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Cryptocurrency
1. Ether has outperformed other large cryptocurrencies over the past week.
Source: FinViz
2. How does Ethereum compare to Solana in the NFT market?
Source: @MichaelRinko
Source: @MessariCrypto
Secondary NFT sales on Solana, a decentralized blockchain, reached $500 million over the past few months.
Source: @MessariCrypto
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3. Ethereum’s proof-of-stake (PoS) blockchain consensus mechanism is far more energy-efficient than mining.
Source: Bloomberg Read full article
4. Banks have been hiring workers with crypto experience.
Source: Bloomberg Read full article
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Commodities
1. Cocoa prices tumbled on Tuesday. Favorable weather conditions in West Africa and ample cocoa supplies at US ports put pressure on the commodity. There won’t be any shortages of chocolate for the holidays.
2. Demand for minerals related to electric vehicle production is expected to accelerate over the next 30 years.
Source: IEA
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Energy
1. Morgan Stanley’s CapEx plans index points to robust investment in the energy space.
Source: Morgan Stanley Research
2. According to EIA, US “battery storage applications have shifted as more batteries are added to the grid.”
Source: EIA Read full article
3. Most major exporters’ governments are “in the money” on oil prices.
Source: IIF
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Equities
1. Let’s start with the year-to-date and month-to-date sector returns.
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
2. Technicals show the S&P 500 in overbought territory as US indices hit record highs.
The Russell 2000 is above the upper Bollinger band.
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3. Will the Fed’s taper bring back some of the volatility we saw during the 2013/14 period?
Source: @Marcomadness2
4. CFO optimism and stock prices have decoupled.
Source: @TaviCosta
5. Stocks have also decoupled from the credit markets.
Source: BofA Global Research
6. Earnings are down quarter-over-quarter for the first time since Q2 of 2020.
Source: Deutsche Bank Research
By the way, the pandemic has done wonders for corporate earnings.
Source: @bespokeinvest Read full article
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7. Small caps haven’t been this cheap relative to large caps in a long time.
Source: Truist Advisory Services
8. CNN’s Fear & Greed index is moving deeper into greed territory.
Source: CNN Business
The put/call ratio is back near the lows.
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9. Stocks favored by hedge funds continue to widen their underperformance.
10. It was an interesting day for the transportation sector.
Source: CNBC Read full article
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Alternatives
1. Let’s start with some data on fintech fundraising activity.
Source: BIS Read full article
2. VC exits surged in Europe.
Source: PitchBook; h/t Emmanuel Ferry
3. Public listings across Europe account for 21% of Q3’s private equity exit value, down from nearly 40% in the first quarter.
Source: PitchBook
4. Here is the relative performance of buyout, growth, and VC strategies.
Source: Pavilion Global Markets
5. Below are the ranking of how broadly “investable” a country is.
Source: BofA Global Research
6. Buyout valuations have been stretched.
Source: Pavilion Global Markets
7. Next, we have the average yields on alternative asset classes.
Source: J.P. Morgan Asset Management
8. Private markets’ AUM has exploded, …
Source: @acemaxx, @FT Read full article
… as pensions allocate more capital to alternatives.
Source: @WSJ Read full article
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Rates
1. Despite increased rate hike expectations, short-term Treasuries are well bid.
2. Morgan Stanley projects an increase in T-Bill issuance in the first quarter of 2022.
Source: Morgan Stanley Research
3. Here is Morgan Stanley’s projection for the Treasury general account with a debt ceiling extension.
Source: Morgan Stanley Research
4. Despite a falling term premium, foreign investors continue to pile money into the Treasury market.
Source: IMF
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Global Developments
1. Dry bulk shipping costs continue to tumble amid softer demand for vessels.
2. This chart shows government bond returns in October vs. Q3.
Source: BCA Research
3. Next, we have some data on manufacturing PMIs.
Source: Truist Advisory Services
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
Source: IHS Markit
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4. Central banks continue to stick to the “transitory” narrative on inflation.
Source: Arbor Research & Trading
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Food for Thought
1. Best-ranked employers:
Source: Statista
2. Lithium resources in the US:
Source: Visual Capitalist Read full article
3. Active users on social media platforms:
Source: The Economist Read full article
4. Wealth held by the middle-class:
Source: @wealth Read full article
5. Poverty rates by state:
Source: @uscensusbureau
6. Female Nobel Prize laureates:
Source: Statista
7. Americans’ trust in themselves:
Source: Gallup Read full article
8. Pathway to US citizenship for high-skilled immigrants:
Source: @calebwatney, @DataProgress
9. CFA Level III pass rate at record lows:
Source: Bloomberg Read full article
10. Per-capita income in the Roman Empire provinces (14 AD):
Source: @simongerman600 Read full article
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