US freight rate inflation hits 36%

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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