Why are Americans quitting their jobs?

The Daily Shot: 11-Jan-22
The United States
The Eurozone
Europe
Asia – Pacific
China
Emerging Markets
Cryptocurrency
Commodities
Energy
Equities
Rates
Global Developments
Food for Thought



 

The United States

1. Let’s begin with some additional data on the December payrolls report.
 
Jobs recovery by wage tier (high-paying jobs have fully recovered):
 
Source: Morgan Stanley Research  
 
Services vs. goods sector employment recovery:
 
Source: Oxford Economics  
 
The impact of Leisure & Hospitality:
 
Source: Wells Fargo Securities  
 
Wage growth by industry (2 charts):
 
Source: Wells Fargo Securities  
 
Source: @johnauthers, @bopinion   Read full article  
 
The rapid decline in the unemployment rate:
 
Source: Morgan Stanley Research  
 
The unemployment rate attribution by duration:
 
Source: Barclays Research  
 
December winners and losers:
 
Source: Bloomberg   Read full article  

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2. Many Americans expect to quit their jobs this year.
 
Source: ResumeBuilder.com   Read full article  
 
Who is quitting?
 
Source: ResumeBuilder.com   Read full article  
 
When?
 
Source: ResumeBuilder.com   Read full article  
 
Why?
 
Source: ResumeBuilder.com   Read full article  

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3. Next, we have some updates on inflation.
 
Nomura estimates another month of strong price gains in December.
 
Source: Nomura Securities  
 
This chart shows the relative share of CPI weighting by category.
 
Source: Bain & Company  
 
Is the Fed too optimistic about inflation moderating over the next couple of years?
 
Source: ANZ Research  

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3. Goldman expects the Fed to hike rates four times this year, which is consistent with the market (the futures-based probability is now above 90%). But beyond this year, Goldman sees a more aggressive rate hike trajectory than the market.
 
Source: Goldman Sachs   Further reading  
 
4. Next, we have some updates on housing.
 
Mortgage rates continue to climb.
 

 
While rates are still historically low, the sharp increase may cool the pandemic-era enthusiasm for housing in the short term. Given the lofty price levels, affordability will deteriorate further.
 
Source: Goldman Sachs  
 
The recent supply chain bottlenecks have been delaying residential construction projects.
 
Source: @WSJ   Read full article  
 
Apartment occupancy rates have been surging.
 
Source: Bloomberg   Read full article  

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5. GDP growth is expected to remain well above pre-pandemic levels through at least 2023.
 
Source: Truist Advisory Services  
 
6. CapEx has been increasingly directed at “new economy” investments.
 
Source: Cornerstone Macro  


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The Eurozone

1. The Sentix confidence index ticked higher this month.
 

 
2. The unemployment rate is back at pre-COVID levels.
 

 
Source: Eurostat   Read full article  

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3. Here are the changes in inflation by country.
 
Source: Barclays Research  
 
The ECB was surprised by the persistent surge in prices.
 
Source: @fwred  

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4. Will the euro test the long-term support?
 
Source: BCA Research  
 
5. Dutch manufacturing output keeps hitting record highs.
 

 
Below is the growth in industrial sales.
 


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Europe

1. Sweden’s private-sector output and consumer spending continue to climb, pointing to robust economic expansion.
 

 

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2. Norway’s CPI surprised to the upside, although the underlying index remains below 2%.
 

 
The PPI is nearing 70% year-over-year (driven by energy prices).
 

 
Norway’s bond yields keep climbing.
 

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3. The Swiss 10-year bond yield is above zero for the first time since 2018.
 

 
4. The EU’s trade gap with China keeps widening.
 
Source: @WSJ   Read full article  
 
5. European economic surprises have been outperforming the US.
 
Source: Morgan Stanley Research  
 
6. European natural gas storage is entering the winter season at its lowest level in 10 years.
 
Source: Bain & Company  


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Asia – Pacific

1. Telecommunications prices have been keeping the Tokyo core CPI in negative territory. But that’s likely to end soon.
 
Source: Pantheon Macroeconomics  
 
2. Bank of Korea is expected to hike rates.
 
Source: Scotiabank Economics  
 
3. Next, we have some updates on Australia.
 
The trade surplus is off the highs.
 

 
The latest leg up in Australian housing appears to be due to both continued owner-occupier credit growth as well as a return of investors.
 
Source: Reserve Bank of Australia¬†  
 
This chart shows Australian house prices and household debt relative to disposable income.
 
Source: Reserve Bank of Australia¬†  
 
Valuations and sentiment point to some upside for the Aussie dollar.
 
Source: BCA Research  


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China

1. Here we go again. Investors remain concerned about developers’ mountain of maturing debt.
 
Source: Fitch Ratings   Read full article  
 

 
China’s HY index hit a multi-year low.
 

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2. China’s construction sector continues to weaken.
 
Cement production:
 
Source: Longview Economics  
 
Steel output:
 

 
Excavator sales:
 
Source: Longview Economics  

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3. Imports of key commodities declined significantly during the second half of 2021.
 
Source: BCA Research  
 
4. The mainland stock market is holding in the lower end of the trading range.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
5. The PBoC will be supporting credit growth.
 
Source: PGM Global  


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Emerging Markets

1. Chile’s inflation continues to climb.
 

 
Separately, the nation’s exports hit a record high.
 

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2. Mexico’s business investment remained depressed in October.
 

 
3. Turkey’s budget deteriorated sharply going into the year-end.
 

 
4. Malaysia’s industrial production continues to climb.
 

 
5. COVID cases hit a record high in the Philippines.
 

 
6. Rate hikes will invert yield curves in some economies.
 
Source: PGM Global  


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Cryptocurrency

1. Bitcoin held support at $40k.
 

 
2. Ether continues to underperform.
 

 
3. Bitcoin’s correlation with stocks has risen over the past few months, while its relationship to gold remains very low.
 
Source: @KaikoData  
 
4. Bitcoin’s option volumes have been muted after hitting a yearly high in October.
 
Source: @KaikoData  
 
5. Digital asset investment products saw record outflows last week as crypto prices slid.
 
Source: CoinShares   Read full article  
 
6. Bitcoin-focused investment products accounted for most of the outflows last week.
 
Source: CoinShares   Read full article  


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Commodities

1. A Canadian housing correction could cause steep declines in the price of copper.
 
Source: Numera Analytics  
 
2. Declines in Sweden’s manufacturing conditions, along with a lower Swedish krona/Swiss franc cross rate, points to downside risk in raw material prices.
 
Source: BCA Research  
 
3. Steel use per capita peaks once a certain level of GDP per capita is reached. Developed countries saw this happen in the 1970s and 80s, linked directly to the peak of manufacturing as a share of their economies.
 
Source: Barclays Research  


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Energy

1. US oil output is expected to return to peak levels by the end of the year.
 
Source: Evercore ISI Research  
 
2. Oil has been rallying despite a stronger US dollar.
 
Source: Alpine Macro  
 
3. Indonesia’s coal hoarding is creating a headache for some economies.
 
Source: VesselsValue  
 
But the nation appears to be easing its export ban.
 
Source: Reuters   Read full article  


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Equities

1. The rotation out of cyclicals, which started in November, has resumed.
 

 
2. Buybacks accounted for 40% of the S&P 500’s total return since 2011.
 
Source: True Insights  
 
3. What size drawdowns should we expect this year?
 
Source: Goldman Sachs  
 
4. Prices often see a wobble when earnings growth peaks.
 
Source: @TimmerFidelity  
 
And earnings expectations have been moving lower.
 
Source: Deutsche Bank Research  
 
But given the robust economic activity, will we see substantial upward earnings surprises?
 
Source: Deutsche Bank Research  

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5. Over the long-run, stock prices follow earnings.
 
Source: @TimmerFidelity  
 
6. The Invesco S&P 500 Equal Weight ETF has been outperforming.
 
Source: Cannon Advisors  
 
7. More upside for small caps relative to the Nasdaq composite?
 
Source: @macro_daily  
 
8. Stock prices remain stretched relative to bonds.
 
Source: Alpine Macro  
 
9. Rising inflation typically results in a higher stock/bond price correlation.
 
Source: BCA Research  
 
10. Industrial stocks could benefit from an inventory rebuild and rising capital spending.
 
Source: MRB Partners  
 
11. Relative earnings of healthcare stocks are starting to improve.
 
Source: MRB Partners  


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Rates

1. The Treasury curve is flattening again at the long end.
 

 
2. More upside for longer-dated Treasury yields?
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
3. This chart shows real 10yr yields in select economies (based on inflation expectations).
 
Source: @RobinBrooksIIF  


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Global Developments

1. Let’s start with sovereign debt month-to-date performance.
 
Source: S&P Global Market Intelligence  
 
2. Speculative net-long dollar positioning is near prior extremes.
 
Source: Longview Economics  
 
However, consensus sentiment on the dollar is not extremely bullish.
 
Source: Longview Economics  

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3. Supply chain bottlenecks may have peaked.
 
Source: @LibertyStEcon   Read full article  
 
4. The global economy is projected to grow faster than the recovery years following the financial crisis.
 
Source: Truist Advisory Services  


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Food for Thought

1. Retiring early:
 
Source: Deutsche Bank Research  
 
2. Highest increases in inflation-adjusted pay:
 
Source: Bloomberg   Read full article  
 
3. Spoken-word audio vs. music:
 
Source: NPR/Edison Research   Read full article  
 
4. Not working due to COVID:
 
Source: @GregDaco, @JuliaRaifman, @aaronsojourner  
 
5. Herd immunity?
 
Source: Alpine Macro  
 
6. Flight incursions by Chinese aircraft into Taiwan:
 
Source: Goldman Sachs  
 
7. The race to the moon:
 
Source: Statista  

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