Posted on by The Daily Shot Editor: Lev Borodovsky

US initial jobless claims are back at pre-COVID levels

The Daily Shot: 19-Nov-21
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Europe
• Japan
• Asia – Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Rates
• Global Developments
• Food for Thought

 

The United States

1. The Philly Fed’s regional manufacturing index rebounded this month as new orders surged (2nd panel).
 

 
Supply challenges worsened.
 

 
And price pressures show no signs of easing. Manufacturers haven’t been boosting prices this rapidly in decades.
 

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2. In contrast to the Philly Fed’s report, the Kansas City Fed’s factory index eased, with new orders slowing sharply.
 

 
The region’s supply bottlenecks are becoming more extreme.
 

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3. Companies are increasingly utilizing air cargo to speed up key deliveries as other modes of freight transportation become backed up. It’s an expensive way to move inventory.
 
Source: Evercore ISI  
 
4. The leading index posted a strong increase in October.
 

 
5. US initial jobless claims are back at pre-COVID levels.
 

 
Continuing claims (which are reported with a one-week lag to initial claims) are also falling rapidly.
 

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6. Is the economy running above potential as it did in the 1960s? For example, the jobless claims trend above shows very little slack in the labor market.
 
Source: Pavilion Global Markets  
 
7. Wholesale used car prices continue to surge.
 

 
8. Excess savings are concentrated largely in the top 20% of households by income. 
 
Source: Morgan Stanley Research  
 
9. Here we go again. Yields on T-bills maturing next month have risen as we approach the X-date.
 

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Canada

1. Crude oil prices and the rate differentials with the US point to further upside for the loonie.
 
Source: Scotiabank Economics  
 
2. A number of large union contracts are about to expire, potentially resulting in sharp wage increases.
 
Source: Shelly Hagan, Bloomberg   Read full article  

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The United Kingdom

1. Consumer confidence unexpectedly improved this month.
 

 
2. This chart shows the housing components of the CPI.
 
Source: @shjfrench  
 
3. Public transport use is recovering.
 
Source: Pantheon Macroeconomics  
 
4. As we saw earlier, UK equities have underperformed since the Brexit referendum.
 
Source: JP Morgan Research  
 
As a result, UK shares appear extremely undervalued (2 charts).
 
Source: JP Morgan Research  
 
Source: JP Morgan Research  
 
By the way, UK equities offer a higher dividend yield than other comparable markets.
 
Source: JP Morgan Research  

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The Eurozone

1. New car registration figures have been awful.
 

 
Here is the cumulative year-to-date trend.
 

 
However, purchasing intentions point to a rebound (once inventories improve).
 
Source: Pantheon Macroeconomics  

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2. Eurozone factory output in a number of economies has underperformed since the introduction of the euro.
 
Source: Gavekal Research  
 
3. The Eurozone’s trade deficit with China has exploded.
 
Source: Pantheon Macroeconomics  

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Europe

1. Electricity prices remain elevated across the EU.
 
Source: @JavierBlas  
 
2. Below is an overview of home price appreciation.
 
Source: EC   Read full article  
 
3. Next, we have the evolution of fiber internet in the EU and the UK (combined).
 
Source: ING  
 
4. Finally, let’s take a look at some trends in the labor markets.
 
• Wage pressures in the euro area have been modest so far.
 
Source: BCA Research  
 
But that’s about to change (2 charts):
 
Source: Nordea Markets  
 
Source: Pantheon Macroeconomics  
 
• Labor shortages:
 
Source: EC   Read full article  
 
• The Beveridge curve:
 
Source: EC   Read full article  
 
• Employment rates by migration status:
 
Source: @EU_Eurostat   Read full article  

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Japan

1. Despite prices spiking around the world, Japan remains in deflation.
 

 
2. Japan’s economy has lagged the rest of the world for decades. There is a lot of room to catch up. 
 
Source: MRB Partners  

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Asia – Pacific

1. South Korea’s stock market has been underperforming.
 
Source: @WSJ   Read full article  
 
The nation’s households have been buying stocks as foreigners sold.
 
Source: @WSJ   Read full article  

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2. New Zealand’s card spending remains depressed.
 

 
Inflation expectations have rebounded sharply.
 

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China

1. Urban areas are facing labor shortages.
 
Source: BCA Research  
 
China’s latest census has revealed poor demographics, with the working-age population shrinking more than expected. 
 
Source: Gavekal Research  

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2. Regional land sales revenues have been exceeding last year’s levels.
 
Source: Fitch Ratings  
 
3. China continues its prolonged journey of weaning itself off investment, shifting to consumption to drive growth. 
 
Source: SOM Macro Strategies  

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Emerging Markets

1. As expected, Turkey’s central bank cut rates to please Erdogan.
 

 
The lira plunged further. Is the selloff overdone?
 

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2. South Africa’s central bank hiked rates for the first time in the current cycle.
 

 
3. Russia’s bond yields continue to climb.
 

 
4. Chile’s Q3 economic growth was slightly below forecasts, but the GDP is now well above the pre-COVID trend.
 

 
5. Fund managers have soured on Brazilian stocks.
 
Source: BofA Global Research  
 
6. EM policy tightening could pause as growth weakens and inflation moderates.
 
Source: Alpine Macro  
 
7. As we saw earlier, EM stocks continue to underperform (2 charts).
 
Source: @MikeZaccardi  
 
Source: Numera Analytics  
 
EM shares underperformed despite higher commodity prices.
 
Source: Numera Analytics  

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Cryptocurrency

1. Cryptocurrencies extended their sell-off over the past week.
 
Source: FinViz  
 
2. Bitcoin dipped below the 50-day moving average.
 

 
Ether is testing support at $4k …
 

 
… and is approaching support around its 100-day moving average.
 
Source: Dantes Outlook  

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3. Bitcoin trading volume declined over the past few days.
 
Source: CoinDesk   Read full article  
 
4. Bitcoin’s correlation with the Nasdaq 100 has vanished.
 
Source: Bloomberg   Read full article  
 
5. Meme cryptos continue to generate interest online.
 
Source: The Advisor Coach  

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Commodities

1. Shares of agriculture firms have been rallying.
 
Source: @Ole_S_Hansen  
 
2. The increase in capital expenditures points to higher returns for commodities in the next 12 months.
 
Source: Variant Perception  
 
And rising commodity producer margins should lead to further capital expenditures.
 
Source: Variant Perception  

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Energy

1. Brent is holding support at the 50-day moving average.
 

 
Traders have been concerned about countries tapping their strategic reserves.
 
Source: Reuters   Read full article  

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2. Here is OPEC’s spare capacity.
 
Source: @ReutersGMF   Read full article  
 
3. US shale companies’ free cash flow has rebounded over the past two years.
 
Source: @markets   Read full article  
 
4. More countries are committing to net-zero carbon emissions. How much of this is lip service?
 
Source: BofA Global Research  

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Equities

1. The S&P 500 hit its 66th record high this year.
 
Source: Bloomberg   Read full article  
 
2. US shares continue to widen their outperformance vs. the rest of the world, and non-US stocks look increasingly cheap on a relative basis.
 
Source: @LizAnnSonders  
 
3. Fund managers still view tech as the most crowded trade.
 
Source: BofA Global Research  
 
4. The Nasdaq 100/S&P 500 ratio hit the highest level since February.
 

 
5. Next, we have some sector performance trends over the past week.
 
• Tech:
 

 
• Semiconductors:
 

 
Source: CNBC   Read full article  
 
• Communication Services:
 

 
• Consumer stocks:
 

 

 
Source: Reuters   Read full article  
 
By the way, the SPDR S&P Retail ETF (XRT) is in a seasonally strong period. 
 
Source: SentimenTrader  
 
• Transportation:
 

 
• Industrials:
 

 
• Energy:
 

 
• Metals & Mining:
 

 
By the way, materials firms have underperformed energy, as many struggle to meet demand.
 
Source: @Marcomadness2  
 
• Healthcare:
 

 
• Financials:
 

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6. Speculative growth stocks have underperformed over the past couple of days.
 

 
7. The momentum factor has been recovering.
 

 
8. High and low carbon intensity portfolios have diverged.
 
Source: @acemaxx, @FT   Read full article  
 
9. Order flow to broker-dealers (especially Robinhood) rose during the meme-stock rally earlier this year.
 
Source: Federal Reserve   Read full article  
 
Citadel was providing most of the payments for order flow during the rally.
 
Source: Federal Reserve   Read full article  

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Rates

1. The TIPS curve (real rates) has been steepening, …
 

 
… which is not the case for nominal yields.
 
Source: Gavekal Research  

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2. The ratio of industrial commodities to gold points to higher Treasury yields.
 
Source: BCA Research  
 
3. The bond market continues to view inflation as transient.
 
Source: Deutsche Bank Research  

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Global Developments

1. Which are the cheapest and most expensive currencies (based on Deutsche Bank’s analysis)?
 
Source: Deutsche Bank Research  
 
2. Global auto sales have stabilized.
 
Source: JP Morgan Research; @carlquintanilla  
 
3. Excess savings now stand at roughly $3.7 trillion, according to Capital Economics.
 
Source: Capital Economics  

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Food for Thought

1. The Global Democracy Index, by country:
 
Source: Statista  
 
2. The actual global COVID deaths are likely to be closer to 17 million.
 
Source: The Economist   Read full article  
 
3. CO2 emissions per million dollars of GDP:
 
Source: @WSJ   Read full article  
 
4. Demand for single-use plastic:
 
Source: @financialtimes   Read full article  
 
5. The number of containers loaded at Port of Long Beach:
 
Source: @WSJ   Read full article  
 
6. An increasingly concentrated shipping industry:
 
Source: Herfindahl-Hirschman Index  
 
7. Walmart and Target inventories:
 
Source: @WSJ   Read full article  
 
8. The market cap of US automakers (a bubble in EV stocks?):
 
Source: Dealbook   Read full article  
 
9. The world’s fastest trains:
 
Source: Visual Capitalist   Read full article  

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Have a great weekend!

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