Investors’ share of US housing market reaches multi-year highs

The Daily Shot: 23-Mar-22
• The United States
• Canada
• The United Kingdom
• The Eurozone
• Asia – Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Rates
• Food for Thought

The United States

1. Let’s begin with the housing market.

• This estimate of housing affordability from Standard Chartered takes us back to the housing bubble era.

Source: Standard Chartered; @lisaabramowicz1

• Investors’ share of the housing market hit a multi-year high.

Source: @johnburnsjbrec

• Are new home prices facing a correction?

Source: Pantheon Macroeconomics

• Homebuilder shares are underperforming, …

… as mortgage rates hit the highest level in three years.

• Despite some of the headwinds, Moody’s expects residential construction activity to keep climbing.

Source: Moody’s Investors Service

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2. Next, we have some updates on inflation.

• Inflation is expected to peak just below 9%, according to Fitch Ratings.

Source: Fitch Ratings

• Consumer inflation expectations could be nearing a peak.

Source: Pantheon Macroeconomics

• Here is the proportion of CPI components rising faster than 1% month-over-month.

Source: Longview Economics

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3. The Richmond Fed’s regional manufacturing index improved this month.

But forward-looking indicators deteriorated.

• Employee hours increased.

• Cost pressures remain extreme, but price indicators appear to have peaked.

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4. Based on the UK data, US COVID cases will be climbing in the days ahead.

Source: Pantheon Macroeconomics

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Canada

1. Consumer confidence is dropping again.

2. The surge in inflation is not just about base effects.

Source: Scotiabank Economics

• What happens to Canada’s CPI when we add used vehicles to the index?

Source: Scotiabank Economics

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3. Market-based inflation expectations keep climbing, with the front end of the inflation curve rising faster.

Source: Scotiabank Economics

4. Canada’s bonds are having the worst year in decades.

Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital

5. This chart shows Canada’s real short-term rates.

Source: @RichardDias_CFA

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The United Kingdom

1. The CPI breached 6% for the first time in decades, exceeding forecasts. The core CPI cleared 5% last month.

• The CPI is expected to keep climbing in the months ahead, peaking at 8%.

Source: Fitch Ratings

• Retail prices are up over 8%.

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2. The 10yr gilt yield is about to take out the 2018 peak.

3. Industrial orders surprised to the upside this month.

Manufacturers are rapidly boosting prices, …

Source: Reuters Read full article

… which will show up in the PPI in the months ahead.

Source: Pantheon Macroeconomics

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4. The government borrowed more than expected last month.

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The Eurozone

1. The Bund market selloff has been massive.

2. The German government wants to bring gasoline prices back toward two euros a liter via subsidies.

Source: @Schuldensuehner, @welt Read full article

3. Eurozone construction output surged in January.

4. Belgium’s March consumer confidence report doesn’t bode well for the Eurozone’s sentiment data.

Source: @OliverRakau

5. Here are the changes in the ECB’s taper plan.

Source: PGM Global

6. The iShares MSCI France ETF (EWQ) is entering a seasonally strong period.

Source: SentimenTrader

Separately, the labor market is rapidly tightening in France.

Source: Fitch Ratings

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7. China is punishing Lithuania for allowing Taiwan to open a de-facto embassy in Vilnius.

Source: Bloomberg Read full article

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Asia – Pacific

1. Dollar-yen continues to climb.

2. Next, we have some updates on Australia.

• Economists continue to boost Australia’s GDP growth forecasts for 2022.

• This month’s Aussie rally has been impressive.

Source: @Scutty

• More Australian workers are shifting to full-time jobs.

Source: ANZ Research

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China

1. Economists keep downgrading China’s GDP growth projections for this year.

2. Home prices continue to fall (3 charts).

Source: Pantheon Macroeconomics

Source: @WSJ Read full article

Source: Chart and data provided by Macrobond

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3. Hong Kong’s inflation remains subdued.

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Emerging Markets

1. Chile’s current account deficit has blown out.

The Q4 GDP growth was a bit below forecasts but still quite strong.

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2. According to the World Economics SMI report, India’s business sector is struggling to grow.

Source: World Economics

3. The risk of default among Russian companies has risen sharply.

Source: S&P Global Market Intelligence

Russia’s inflation is surging.

Source: Fitch Ratings

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4. US equities and the dollar are the key drivers of EM equity returns.

Source: TS Lombard

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Cryptocurrency

1. This chart shows that BTC long liquidations have dominated so far this year. Will we see an increase in short liquidations around the $44K-$45K resistance zone?

Source: @Negentropic_

2. Roughly 25% of the top 50 cryptos are performing better than bitcoin over the past 90 days. That does not confirm “altcoin season” just yet.

Source: Blockchain Center Read full article

3. This chart shows how a rotation from bitcoin to altcoins can reduce drawdowns during risk-off periods (and vice versa).

Source: @Negentropic_

4. The Bitwise Crypto Industry Innovators ETF (BITQ) is now outperforming BTC over the past 30 days.

Source: CoinDesk Read full article

5. Energy companies have been getting into bitcoin mining.

Source: Bloomberg Read full article

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Commodities

1. LME nickel trading finally stabilized, but prices continue to drop.

2. Fertilizer prices and shares of companies in that sector have been surging.

Source: @AndreasSteno

Source: @Marcomadness2

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3. The divergence between the dollar and commodities persists.

Source: PGM Global

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Energy

1. Russia’s crude oil discount to Brent has widened further.

Source: Neste

• China and India will be replacing some of the lost sales elsewhere.

Source: Reuters Graphics

• Oil tanker activity at Russian ports has declined sharply.

Source: @RobinBrooksIIF, @JonathanPingle

• The Dallas Fed sees a global recession without Russian energy supplies.

Source: @WSJ Read full article Further reading

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2. Will Indonesia’s coal exports rebound this year to replace some of the lost supply from Russia?

Source: Fitch Ratings

3. About a third of US domestic petroleum consumption is outside of the transportation sector.

Source: Moody’s Investors Service

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Equities

1. Stocks continue to rebound, with some analysts viewing the equity market as a “haven” against inflation.

The fear of rising rates we saw in recent months has magically evaporated. The Nasdaq 100 is suddenly correlated with Treasury yields …

Source: barchart.com

… and real rates.

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2. The recent surge in the Nasdaq’s momentum looks similar to prior troughs.

Source: SentimenTrader

3. The equity/bond ratio (SPY/TLT) continues to strengthen as rates rise.

Source: Dantes Outlook

4. Stocks tend to struggle during periods of accelerated rate hikes.

Source: @WillieDelwiche Read full article

5. Next, we have some updates on the volatility market.

• Indicators of equity vol (VIX) and rate vol (MOVE) have been moving in opposite directions.

• The VIX futures curve is back in contango.

• VXX (a long VIX futures ETN) has decoupled from its NAV after Barclays suspended sales.

These two ETNs are essentially the same product.

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Rates

1. Nine 25 bps rate hikes this year are increasingly likely, according to the futures market.

2. Rising liquidity premium in Treasuries has widened the spread between on- and off-the-run 5yr notes.

Source: Bloomberg Read full article

3. Does Powell’s suggestion to focus on the short end of the curve produce a better economic signal?

Source: Deutsche Bank Research

4. Treasuries have been selling off despite inflows from Japan.

Source: @EffMktHype

5. Surprisingly, the largest long-term Treasury ETF has been experiencing fund inflows.

Source: Chris Murphy, Susquehanna International Group

6. There has been a rapid decline in global debt with negative yields.

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Food for Thought

1. US labor force recovery:

Source: @WSJ Read full article

2. US Southwest land border apprehensions:

Source: CBP

• Outcomes of apprehensions:

Source: American Immigration Council Read full article

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3. In the late 1990’s, rapid wage gains were not inflationary (due in part to robust productivity gains).

Source: Pantheon Macroeconomics

4. Widening meat-processing margins:

Source: @WSJ Read full article

5. Public spending on education:

Source: Wells Fargo Securities

6. Where biodiversity is most at risk in the US:

Source: The NY Times Read full article

7. US dog ownership by generation:

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