The Daily Shot: 10-Mar-22
• The United States
• The United Kingdom
• The Eurozone
• Europe
• Japan
• Asia – Pacific
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Rates
• Food for Thought
The United States
1. The labor market remains tight, with the job openings report topping expectations.
Here are the job openings and quit rates by sector.
Source: Wells Fargo Securities
And this chart shows the Beveridge curve.
Source: BLS
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2. Mortgage applications have been surprisingly strong, …
… despite the recent runup in mortgage rates.
• Refinance candidates have decreased as mortgage rates rise.
Source: Black Knight Technologies
• This chart shows the amount of equity withdrawn from homes via cashout refinance.
Source: Black Knight Technologies
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4. Next, we have some updates on inflation.
• Economists continue to downgrade their GDP growth forecasts for this year while boosting inflation projections.
• The CPI peak projections keep getting pushed out.
Source: @economics
• The NFIB report points to further increases in the median CPI (year-over-year).
Source: @MikaelSarwe
• Nomura expects another strong CPI report today (for February), boosted by shelter costs.
Source: Nomura Securities
• Here are the monthly changes in various core CPI measures.
Source: Nomura Securities
• Have used car prices peaked?
• How much did inflation eat into wages this year? This chart shows real wage gains by wage “category.”
Source: Oxford Economics
• What is the impact of rising fuel prices on consumer spending?
Source: Truist Advisory Services
• Supply chain stress levels are increasingly driven by rising prices and labor costs.
Source: Oxford Economics
By the way, trucking company sales have been moderating.
Source: Evercore ISI Research
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5. Economists expect around six Fed rate hikes this year.
• The current monetary policy is extraordinarily accommodative.
Source: ANZ Research
• The Fed’s starting point for this tightening cycle is unusual.
Source: ANZ Research
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The United Kingdom
1. Home prices continue to climb at a strong clip.
2. Will the CPI exceed 8%? Here are two forecasts.
• Pantheon Macroeconomics:
Source: Pantheon Macroeconomics
• Barclays:
Source: Barclays Research
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3. The UK needs to boost its nuclear power capacity.
Source: Carbon Brief Read full article
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The Eurozone
1. Rates implied volatility remains elevated ahead of the ECB.
2. Despite rapid upgrades in inflation forecasts, …
Source: Barclays Research
… rate hike expectations have eased.
Source: Pantheon Macroeconomics
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3. Italian industrial production slumped in January.
4. Factory output remains robust in the Netherlands.
5. Eurozone loan growth has normalized.
Source: ECB
6. Slower growth in the money supply points to downside risks for economic activity.
Source: BCA Research
7. Replacing Russian natural gas will be challenging.
Source: Algebris Read full article
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Europe
1. European shares surged on Wednesday amid short-covering.
This chart shows the correlation of different sectors’ earnings expectations to crude oil.
Source: Barclays Research
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2. Next, we have some updates on Sweden.
• Private sector output:
• Industrial orders:
• Household consumption:
• The unemployment rate:
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3. How much municipal waste is generated per person in the EU?
Source: Eurostat Read full article
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Japan
1. The PPI surprised to the upside.
2. Consumer inflation expectations have been climbing.
Source: Evercore ISI Research
3. The 10-year government bond yield has been testing the top of the central bank’s tolerance band.
Source: Goldman Sachs
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Asia – Pacific
1. Conservative Yoon Suk-yeol won South Korea’s presidential election.
Source: Reuters Read full article
Separately, the nation’s household credit growth has been slowing.
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2. Australian inflation expectations are approaching 5% for the first time in years.
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China
1. Export growth could be at risk if European economies slow down sharply.
Source: Alpine Macro
2. Government spending should rebound.
Source: Gavekal Research
3. More provinces are getting closer to the official threshold for fiscal consolidation.
Source: Gavekal Research
4. Here is a look at the Henan province’s GDP components.
Source: Fitch Ratings
5. Energy trade with Russia has been growing.
Source: IIF
But the total trade with Russia is relatively small.
Source: Gavekal Research
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6. Hong Kong’s elderly vaccination rates are relatively low.
Source: @financialtimes Read full article
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Emerging Markets
1. Brazil’s industrial production dropped in January.
2. Mexican core CPI continues to surge.
3. LatAm equities and currencies have been outperforming in recent weeks, …
Source: Gavekal Research
Source: PGM Global
… as EM decouples.
Source: PGM Global
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4. Which countries are most dependent on Ukrainian and Russian wheat?
Source: @financialtimes Read full article
5. Next, we have some updates on Russia.
• The central bank is having a tough time strengthening the ruble.
• Inflation is expected to surge this month.
• How bad will the recession get?
Source: @markets Read full article
• Russia has become largely independent of external financing.
Source: Goldman Sachs
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6. Ukraine boosted its FX reserves over the past few years.
Source: Goldman Sachs
Ukrainian port activity has collapsed.
Source: Longview Economics
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Commodities
1. Wheat is down 12% from the highs.
2. Soybean meal and soy oil futures are surging amid export restrictions around the world.
Source: Reuters Read full article
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3. The highest price increases have been in Russia/Ukraine-exposed commodities.
Source: Numera Analytics
4. Commodities have diverged from the dollar.
Source: PGM Global
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Energy
1. Oil tumbled on Wednesday.
Source: @WSJ Read full article
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2. US crude oil inventories remain tight.
Source: Princeton Energy Advisors
• Will gasoline demand begin to ease in response to the price spike?
Gasoline inventories are not low.
• Distillates demand has been strong, …
Source: Princeton Energy Advisors
.. while inventories are tumbling.
• Here are the total liquids inventories.
Source: BofA Global Research
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3. European natural gas futures tumbled but remain well above the previous peak.
Inventories are not unusually low.
Source: Barclays Research
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4. This chart shows the put option volume on SPDR Energy Select Sector ETF.
Source: @danny_kirsch
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Equities
1. Stocks rose sharply on Wednesday.
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2. Small caps have been resilient in the recent selloff, with microcaps outperforming over the past week.
3. CTAs have been short equities as downtrends unfold.
Source: Deutsche Bank Research
4. Equities have become more attractive relative to bonds.
Source: @markets Read full article
5. High-dividend and dividend-growth stocks tend to outperform during periods of high inflation.
Source: @LizAnnSonders, @GoldmanSachs
6. Discretionary investor equity positioning is neutral, while systematic strategies have reduced their exposure to stocks.
Source: Deutsche Bank Research
7. Stock splits tend to boost performance.
Source: BofA Global Research; @SamRo
Here is Amazon.
Source: @FerroTV
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Rates
1. The iShares 20+ Year Treasury Bond ETF (TLT) is approaching support
Source: Alpine Macro
2. Aside from China, major foreign holders have increased their purchases of Treasuries as yields rose.
Source: PGM Global
Institutions earn a healthy yield pick-up in Treasuries versus local government bonds. For example, here is Japan’s case.
Source: PGM Global
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Food for Thought
1. Shopping mall visits relative to 2019:
Source: Placer.ai
2. Affordability migration:
Source: Wells Fargo Securities
3. Living paycheck to paycheck:
Source: MagnifyMoney Read full article
4. By 2030, US federal tax revenues will fall short of mandatory spending on entitlements and interest. There will be no room for discretionary spending.
Source: J.P. Morgan Asset Management
5. The average cost of money remittances:
Source: J.P. Morgan Asset Management
6. Increases in death-benefit claims:
Source: @WSJ Read full article
7. Oil production in Africa:
Source: Statista
8. Russian banks switching to the Chinese card system (Unionpay):
Source: @disclosetv
9. Smart and sad or dumb and happy?
Source: @YouGovAmerica
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