The Daily Shot: 09-Dec-21
• The United States
• Canada
• The United Kingdom
• Europe
• Asia – Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. The October job openings report topped forecasts, pointing to persistently tight labor markets.
• Private-sector job openings hit a record high.
• Job vacancies in manufacturing are surging.
• Below are the changes by sector.
Source: @nick_bunker
• The number of unemployed workers per job opening hit a record low.
• Here is the Beveridge curve.
Source: BLS
——————–
2. Next, we have a couple of additional updates on the labor market.
• Returning to the pre-COVID employment growth path will be challenging. Here is a forecast from Oxford Economics.
Source: Oxford Economics
• Stalled labor force growth will cap US economic expansion.
Source: Alpine Macro
——————–
3. Loan applications to purchase a home remained strong after the Thanksgiving-week lull.
4. Wholesale used car prices climbed another 5% in November.
5. Next, we have some updates on supply-chain challenges.
• Port of LA container ships’ waiting time:
Source: @business Read full article
• Searches for items related to supply chain disruptions on Google:
Source: Barclays Research
• Lead times to deliver semiconductors:
Source: Bloomberg Read full article
• When do economists see supply-chain disruptions easing?
Source: Oxford Economics
——————–
6. The Build Back Better (BBB) plan could push tax hikes off until after the 2024 election.
Source: SOM Macro Strategies
Still, BBB tax hikes could be the largest in both absolute terms and relative to GDP.
Source: SOM Macro Strategies
——————–
7. US industries have become much more concentrated in recent decades. The average Herfindahl-Hirschmann Index (HHI) has risen 90% since the start of the 2000s.
Source: Barclays Research
Back to Index
Canada
As expected, the BoC left rates unchanged. But the tone seemed a bit more dovish.
Source: Reuters Read full article
Bond yields declined.
Back to Index
The United Kingdom
1. The pound continues to drift lower vs. USD.
2. Natural gas prices are surging again.
This is going to feed into much higher prices at the consumer level.
Source: BoE Read full article
——————–
3. Wage growth is elevated relative to the current unemployment rate.
Source: BoE Read full article
Back to Index
Europe
1. Sweden’s economic growth remains robust.
• Private sector output:
• Consumer spending:
——————–
2. Denmark’s omicron cases are surging. Why Denmark? Because the country has a highly effective program of sequencing infections to identify variants. This trend is probably taking place in your country as well.
Source: @M_B_Petersen
3. Swiss COVID cases hit a record high.
4. Poland’s central bank hiked rates again as inflation surges.
5. Russian gas flows to Europe remain weak, …
Source: ANZ Research
… depressing inventories …
Source: ANZ Research
… and boosting electricity prices.
Source: @MikeZaccardi
——————–
6. This chart shows Q3 GDP growth by country across the EU.
Source: Eurostat Read full article
Back to Index
Asia – Pacific
1. Business conditions in Japan improved this quarter.
2. The percentage of stocks in South Korea’s KOSPI index trading below their lower Bollinger Band increased to the seventh-highest level in history, which typically precedes a price bounce.
Source: SentimenTrader
Back to Index
China
1. The November CPI report was softer than expected.
• The core CPI declined, …
… pulled lower by phone prices.
• Household durables inflation continues to climb.
• Food inflation is in positive territory as pork prices stabilize.
——————–
2. The PPI was off the highs but above forecasts.
3. Shares broke out of their trading range.
China’s stocks are tied to credit flows.
Source: Alpine Macro
And as Beijing eases, the credit cycle bottoms (2 charts).
Source: Alpine Macro
Source: Barclays Research
——————–
4. Real estate has been a huge part of the Chinese economy.
Source: Barclays Research
5. The GDP growth spread between China and the US is expected to narrow sharply.
Source: BCA Research
Back to Index
Emerging Markets
1. Brazil’s central bank announced another aggressive rate hike and indicated there is at least one more to come.
Source: Reuters Read full article
Beyond that point, the central bank might pause. Here is the two-year bond yield.
• Brazil’s retail sales remain below the pre-COVID trend.
——————–
2. Russia’s CPI surprised to the upside.
Russian stocks have been underperforming amid elevated geopolitical risk.
——————–
3. The interest burden on EM government debt is rising.
Source: IIF
EM external financing needs are back near pre-pandemic levels.
Source: IIF
Here are the financing requirements by country.
Source: Capital Economics
Back to Index
Cryptocurrency
1. Ether has widened its outperformance over bitcoin.
2. Bitcoin’s trading volume continued to decline over the past few days.
Source: CoinDesk Read full article
Risk appetite for bitcoin remains depressed.
Source: Alternative.me
——————–
3. Several crypto CEOs testified during a U.S. House Financial Services Committee hearing on Wednesday. Regulation is clear, but enforcement is not.
Source: CoinDesk Read full article
4. Bitcoin’s year-to-date return has narrowed relative to the S&P 500 over the past month.
Source: CoinDesk Read full article
Back to Index
Commodities
1. Copper inventories hit the lowest level since 2006.
2. Fitch Solutions expects lower gold prices next year as the dollar strengthens and bond yields start to recover.
Source: Fitch Solutions Macro Research
Here are the drivers of gold demand growth.
Source: ANZ Research
——————–
3. US agricultural exports to China are running well ahead of 2020.
Source: @kannbwx
Back to Index
Energy
1. US crude oil production is breaking out.
North American oil supply should reach previous highs by the end of next year.
Source: Evercore ISI Research
——————–
2. US gross crude oil exports have been flat since the start of the pandemic.
3. US refinery runs remain soft.
4. This map shows the recovery in global oil demand by region.
Source: Evercore ISI Research
Back to Index
Equities
1. The omicron/Fed scare didn’t last very long.
2. In a year with such high index returns, a substantial percentage of stocks dropped more than 35%.
Source: J.P. Morgan Asset Management
3. Next, we have equity factor return attribution by year.
Source: S&P Global Market Intelligence
4. Investors rotated out of financials and into tech and real estate ETFs last month.
Source: SPDR Americas Research, @mattbartolini
5. This chart shows US share price outperformance relative to the rest of the world vs. US earnings outperformance.
Source: MRB Partners
6. The S&P 500 real earnings yield hit a new low.
h/t @nchrysoloras
7. Nasdaq pulls ahead of NYSE in IPO volume.
Source: @WSJ Read full article
Back to Index
Credit
1. High-yield spreads tightened sharply as risk aversion faded.
Source: Kathy Jones, Charles Schwab
2. The spread between COVID-sensitive and non-sensitive HY bonds is back near zero.
Source: Deutsche Bank Research
3. Muni issuance has been surging.
Source: PGM Global
Returns remain healthy.
Source: PGM Global
Back to Index
Global Developments
1. This chart shows 2021 equity return attribution for select markets.
Source: J.P. Morgan Asset Management
2. Outside of the US, most equity ETFs have seen recent inflows below their historical median. EM had the steepest drop-off.
Source: SPDR Americas Research, @mattbartolini
3. Climate funds have seen exceptional inflows compared to other ESG funds over the past year.
Source: IMF
4. Expectations of higher policy rates in the US relative to other developed countries have supported the dollar.
Source: Mizuho Securities USA
Long dollar positioning continues to rise.
Source: Mizuho Securities USA
——————–
Food for Thought
1. AMC and GameStop visits vs. 2019:
Source: Placer.ai
2. When Americans started shopping this year:
Source: Digital.com
3. A data point on omicron from South Africa:
Source: Deutsche Bank Research
4. China’s share of global commodity production for the elements of the periodic table:
Source: U.S. Department of the Interior
5. Working remotely:
Source: Deutsche Bank Research
Source: BofA Global Research; @MikeZaccardi
——————–
6. The largest sovereign wealth funds:
Source: Visual Capitalist Read full article
7. 13-year-olds reading for fun:
——————–
Back to Index