The Daily Shot: 16-Nov-21
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. The NY Fed’s manufacturing report, the first regional survey of the month, showed a rebound in factory activity.
• The index of CapEx expectations continues to climb.
• Hiring has been surging, and factory workers are busy (2nd panel).
• However, some forward-looking indicators are less upbeat.
• Measures of supply bottlenecks appear to have peaked.
• But price indices show no signs of easing.
Indicators of price expectations also jumped in November.
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2. Next, we have some updates on inflation.
• The Evercore ISI apartment company survey shows an increasingly tight supply, which will be a tailwind for rent inflation.
Source: Evercore ISI
• Domestic freight rate inflation hit 36% year-over-year, …
Source: Cass Information Systems
… as shipments slow due to logistics hurdles.
Source: Cass Information Systems
• The sharp rise in import costs has fed through to domestic prices over the past year. A stronger US dollar should slow import inflation.
Source: NY Fed Read full article
• An improvement in supply chain bottlenecks (when it comes) should ease inflationary pressures.
Source: Alpine Macro
• Economists continue to downgrade their GDP growth estimates for next year while boosting their inflation forecasts.
Source: @TheTerminal, Bloomberg Finance L.P.
• The U. Michigan consumer inflation expectations keep climbing, …
… and so are market-based inflation expectations.
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3. The inflation-adjusted fed funds rate shows extreme monetary accommodation.
Source: @Marcomadness2
4. Pay growth for low-wage workers has been outperforming.
Source: @WSJ Read full article
5. Individual income tax receipts are well above the pre-pandemic trend.
Source: FHN Financial
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Canada
1. Manufacturing sales slowed in September.
2. Existing home sales rebounded last month.
3. Self-employment slowed since the start of the pandemic.
Source: @RichardDias_CFA
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The United Kingdom
1. Bailey expressed concern about inflation. Gilt yields jumped.
Source: Reuters Read full article
2. Economists now expect the BoE benchmark interest rate to reach 0.65% by the end of next year, …
… as they boost their CPI forecasts.
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3. UK stock funds/ETFs are experiencing heavy outflows.
Source: Goldman Sachs; @MrBlonde_macro
4. Vaccines are working.
Source: Deutsche Bank Research
But hospitals continue to experience delays.
Source: @bopinion Read full article
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The Eurozone
1. The euro has been under pressure as the US inflation surprise raised bets for a more hawkish Fed.
2. Economists continue to boost their CPI forecasts for next year …
… and reducing their projections for the unemployment rate.
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3. Here are the components of Germany’s CPI.
Source: @M_McDonough
4. The euro-area trade surplus continues to fade, pressured by soaring energy costs.
5. Housing investment has recovered.
Source: ECB Read full article
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Europe
1. Sweden’s CPI has rebounded.
2. Norway’s bond yields have been surging.
3. This chart shows the changes in the EU’s industrial production since 2020.
Source: Eurostat Read full article
4. Russian natural gas flows remain tepid.
Source: Nordea Markets
5. European earnings have substantially lagged the US for many years, explaining the relative underperformance. Most recently this decline has stopped, but relative performance has continued downwards.
Source: Deutsche Bank Research
Source: @jessefelder; BNN Read full article
The STOXX 600 earnings expectations hit a new high.
h/t @mikamsika
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China
1. Market pressure on developers’ debt appears to be easing.
2. Construction and property sales continue to slow.
Source: Gavekal Research
3. Foreign direct investment is running in line with last year’s levels.
4. Goldman’s hedge fund clients have been cutting their exposure to Chinese stocks. A bullish sign?
Source: Goldman Sachs
5. Falling economic growth in China has not had much impact on government bond yields, unlike other Asian economies.
Source: BCA Research
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Emerging Markets
1. India’s wholesale inflation is back above 12%.
Indian exports hit a record high.
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2. Vietnam is recovering from the 2021 COVID hit.
• Mobility:
Source: BofA Global Research; @carlquintanilla
• Car sales:
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3. The Turkish lira cleared another record low, blasting past 10.0 to the dollar.
Source: @markets Read full article
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4. Iran’s economy is struggling.
Source: Gallup Read full article
5. The rebound in EM fund flows has been driven by China.
Source: @RobinBrooksIIF
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Cryptocurrency
1. Cryptos took a hit on Monday.
Source: CNBC Read full article
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2. Crypto land has offered some high but very volatile interest rates to users.
Source: IMF
3. Bitcoin’s price relative to its 200-day moving average is still below prior extremes.
Source: Glassnode Read full article
4. Inflows to crypto investment products are starting to slow. It appears that investors already piled in on the first US futures-based bitcoin ETF last month.
Source: CoinShares Read full article
Bitcoin products saw the majority of inflows last week, pushing the industry’s total assets under management to a record high.
Source: CoinShares Read full article
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Commodities
1. Inflation concerns sent the US dollar and gold in the same direction, which is highly unusual.
Source: Bloomberg
2. This chart shows the breakdown of copper end-use.
Source: Numera Analytics
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Energy
1. Oxford Economics expects oil prices to begin moderating as the market turns to surplus.
Source: Oxford Economics
2. Global oil consumption growth in the second half has been dominated by emerging markets.
Source: Numera Analytics
3. Clean tech deployment is expected to multiply over the next decade …
Source: BofA Global Research
… as long as solar and wind power costs continue to decline.
Source: BofA Global Research
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Equities
1. The correlation between VIX and the S&P 500 increased over the past week, which could signal a short-term market pullback.
Source: Cannon Advisors
2. This chart shows the S&P 500 earnings estimates over the next few quarters.
Source: @DataTrekMB Read full article
3. This chart shows which sectors have outperformed during previous tightening cycles.
Source: MarketDesk Research
4. Small-caps have only outperformed large caps two out of the last eight months.
Source: MarketDesk Research
5. The upward earnings revision advantage of large-cap stocks has narrowed relative to small-caps.
Source: MarketDesk Research
6. The consensus long-term growth expectation for the S&P 500 is at record highs. Too much enthusiasm?
Source: BofA Global Research; @SamRo
7. The recent outperformance of value versus growth appears stretched.
Source: MarketDesk Research
8. Over the years, the SPDR S&P 500 ETF (SPY) performance has been driven by overnight returns.
Source: Chris Murphy, Susquehanna International Group
But that’s no longer the case as retail investors (and their options trades) are moving the market during regular trading hours.
Source: Chris Murphy, Susquehanna International Group
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9. SPACs backed by experienced operators have significantly outperformed those that aren’t.
Source: Wolfe Research; h/t Variant Perception
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Credit
1. Corporate credit saw some inflows recently.
Source: BofA Global Research
But the biggest investment-grade ETF (LQD) has been experiencing outflows.
Source: Chris Murphy, Susquehanna International Group
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2. Leveraged loan supply in the US is at record levels …
Source: Deutsche Bank Research
… and at a post-financial-crisis record in Europe.
Source: Deutsche Bank Research
3. Banks in the US built up provisions almost to the same level as in the financial crisis, mainly because of pro-cyclical accounting changes. The actual credit outcome has been significantly better, suggesting continued provision releases.
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
4. US large-cap debt to market cap ratio is near record lows.
Source: BofA Global Research
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Global Developments
1. Japan, Germany, and France account for more than half of the market in negative-yielding sovereign debt.
Source: @financialtimes Read full article
2. Some of the highest CPI increases have been in Central Europe.
Source: S&P Global Market Intelligence
3. Where do markets see policy rates going over the next few years?
Source: BCA Research
Here is a forecast from Morgan Stanley for rate hikes for the current and next quarters.
Source: Morgan Stanley Research
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4. This chart shows cumulative fund flows into bonds, equities, and cash.
Source: Goldman Sachs; @MrBlonde_macro
5. Finally, here is a forecast for the 2022 GDP from Numera Analytics, compared to potential growth.
Source: Numera Analytics
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Food for Thought
1. Attitudes about commuting:
Source: Statista
2. Receiving an inheritance:
Source: MagnifyMoney Read full article
3. Regional inflation rates in the US:
Source: @WSJ Read full article
4. Money or time?
Source: @CivicScience Read full article
5. Murder rates in US border towns:
Source: @axios Read full article
6. Another warm November:
Source: Nordea Markets
7. How do Americans wake themselves up:
Source: YouGov America
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