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.
——————–
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.
——————–
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
——————–
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
Back to Index
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
Back to Index
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
Back to Index
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.
——————–
3. New Zealand’s retail credit/debit card spending returned to its pre-COVID trend last month.
Back to Index
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
——————–
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
——————–
5. Property sales appear to be stabilizing.
Source: TS Lombard
6. Has China’s steel production bottomed?
Source: ANZ Research
Back to Index
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.
——————–
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
——————–
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.
——————–
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
Back to Index
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
——————–
4. These are the current drivers of the Arbor Data Science bitcoin pricing model.
Source: Arbor Research & Trading
Back to Index
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
Back to Index
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
——————–
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
Back to Index
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).
Back to Index
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
——————–
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
——————–
Have a great weekend!
Back to Index