The global post-pandemic spike in demand for durable goods came from the US

The Daily Shot: 10-Dec-21
The United States
The United Kingdom
The Eurozone
Asia – Pacific
China
Emerging Markets
Cryptocurrency
Energy
Equities
Rates
Global Developments
Food for Thought


 


 

The United States

1. The 2-year Treasury yield climbed above 0.7% as traders bet on a more hawkish Fed policy.
 

 
The market is now nearly certain that we will see three rate hikes next year.
 

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2. Next, we have some updates on the labor market.
 
The Atlanta Fed’s wage tracker points to faster growth in earnings, especially for hourly workers.
 
Source: @AtlantaFed  
 
Jobless claims remain near multi-year lows (there is some noise in the data around Thanksgiving).
 

 
The hires-to-openings ratio, which hit a record low, points to an increasingly tight labor market. At this point, the FOMC has all the ammunition it needs to accelerate taper.
 

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3. Household net worth is at record highs as a share of US GDP as house prices and stocks surge.
 
Source: @evan_lorenz  
 
Source: MarketWatch   Read full article  

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4. Much of the post-pandemic growth in global demand for durable goods came from the US (causing supply-chain bottlenecks).
 
Source: BoE   Read full article  
 
5. The number of new business applications has not let up since spiking during the pandemic.
 
Source: Fitch Ratings  
 
6. As we saw earlier (#4 here), equities and lumber prices point to an uptick in residential construction. Here is the Evercore ISI survey of homebuilders.
 
Source: Evercore ISI Research  


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The United Kingdom

1. Omicron could dent the UK GDP early next year.
 
Source: Pantheon Macroeconomics  
 
2. UK trade flows have underperformed European peers.
 
Source: @BenChu_   Read full article  


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The Eurozone

1. The short-term rate differentials with the US don’t bode well for the euro.
 

 
2. Next, we have some updates on Germany.
 
Exports hit a record high.
 

 
But Germany’s trade surplus continues to trend lower.
 

 
COVID cases appear to have peaked, …
 

 
… but the number of patients in intensive care is climbing.
 
Source: Commerzbank Research  
 
Restaurant visits continue to drop.
 
Source: Commerzbank Research  


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Asia – Pacific

1. Japan’s producer prices continue to surprise to the upside.
 

 
2. South Korean exports are very dependent on memory chip pricing.
 
Source: Gavekal Research  
 
COVID cases in South Korea continue to surge.
 

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3. New Zealand’s retail credit/debit card spending returned to its pre-COVID trend last month.
 


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China

1. Rising trade flows have been pushing China’s currency higher.
 
Source: @Trinhnomics, @DavidInglesTV  
 
But Beijing is losing patience with the renminbi’s surge, which has tightened financial conditions in China. The latest official mid-rate fixing was much weaker than the forecast.
 
Source: @TheTerminal, Bloomberg Finance L.P., h/t @SofiaHCBBG  

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2. The PBoC’s policy easing attracted foreign investors into mainland stocks.
 
h/t April Ma  
 
3. The November report on money supply measures was mixed.
 

 
4. China’s economic surprise index has recently popped into positive territory again.
 

 
4. Evergrande and Kaisa are now officially in default. Beijing is not willing to provide support to these entities and wants the offshore debt restructuring to handled in Hong Kong.
 
Source: Fitch Ratings   Read full article  
 
Source: Fitch Ratings   Read full article  

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5. Property sales appear to be stabilizing.
 
Source: TS Lombard  
 
6. Has China’s steel production bottomed?
 
Source: ANZ Research  


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Emerging Markets

1. Let’s begin with South Africa.
 
Retail sales remain below pre-COVID levels.
 

 
Manufacturing output dipped in October.
 

 
COVID cases are soaring.
 

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2. USD/INR broke through resistance at 75.0 as the rupee comes under pressure.
 
Source: barchart.com  
 
3. Vietnam continues to struggle with the pandemic spike.
 

 
4. Turkey’s monetary policy stands out.
 
Source: @WSJ   Read full article  
 
Foreign investors have been unloading Turkish assets in recent years.
 
Source: @WSJ   Read full article  

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5. Which central banks are far behind the curve?
 
Source: Oxford Economics  
 
6. Mexico’s core CPI breached the 2009 peak.
 

 
7. Peru’s central bank hiked rates again as inflation climbs.
 

 
The nation’s currency has sold off recently due to political uncertainty.
 

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8. EM F/X volatility has risen recently.
 
Source: PGM Global  
 
9. Inflation has accelerated, but local bond yields remain low by historical standards.
 
Source: Oxford Economics  


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Cryptocurrency

1. Will bitcoin retest the 200-day moving average support?
 

 
2. Litecoin has underperformed over the past 30 days.
 

 
3. The bitcoin network processing throughput is back at pre-China-crackdown highs.
 
Source: Bloomberg   Read full article  
 
Source: Blockchain.com  

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4. These are the current drivers of the Arbor Data Science bitcoin pricing model.
 
Source: Arbor Research & Trading  


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Energy

1. According to ANZ, OPEC will take its oil production above pre-COVID levels next year.
 
Source: ANZ Research  
 
2. Global crude oil and products inventories, as a percentage of total consumption, are well below the five-year moving average.
 
Source: MRB Partners  
 
3. US natural gas inventories are now roughly in line with the five-year average.
 
Source: @EIAgov   Read full article  


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Equities

1. It’s been a tough few weeks for small caps.
 

 
2. Investors unloaded speculative stocks again (3 charts).
 
Source: Bloomberg   Read full article  
 

 

 

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3. The Nasdaq Composite breadth has been deteriorating all year.
 

 
4. Small-cap value relative performance (vs. growth) has diverged from large-cap value this year.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
5. This table shows stock sectors and styles by their relationship to the US yield curve.
 
Source: Citi Private Bank  
 
6. US equities have outperformed global stocks as new COVID variants emerged (foreign investors move capital into the US).
 
Source: TS Lombard  
 
7. Share buybacks sharply cut shares outstanding, boosting earnings-per-share (EPS) relative to total earnings.
 
Source: PGM Global  
 
8. How do equity factors perform around rate hikes?
 
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital  


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Rates

The yield curve has been flattening recently. And the market expects the curve to approach inversion two years out (due to the Fed’s aggressive hikes).
 


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Global Developments

1. How would you describe labor availability?
 
Source: Evercore ISI  
 
2. Container shipping has been characterized by alliances since the mid-90s. The current three alliances now account for 80% of the total market.
 
Source: International Transport Forum   


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Food for Thought

1. Unemployment rates in select economies:
 
Source: OECD   Read full article  
 
2. US death-benefit payments:
 
Source: @WSJ   Read full article  
 
3. Vaccine production plans:
 
Source: Scotiabank Economics  
 
4. COVID news story count:
 
Source: TS Lombard  
 
5. COVID virus RNA presence in Massachusetts sewer water (Deer Island Treatment Plant):
 
Source: Massachusetts Water Resources Authority   Read full article  
 
6. Staying informed about current events:
 
Source: Gallup   Read full article  
 
7. Using food pantries:
 
Source: @USDA_ERS   Read full article  
 
8. Cars with the longest production runs:
 
Source: Visual Capitalist   Read full article  

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Have a great weekend!


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