Posted on by The Daily Shot Editor: Lev Borodovsky

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  

——————–

 
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  

——————–

 
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.
 

——————–

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

Back to Index

 

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  

——————–

 
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  

Back to Index

 

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%.
 

——————–

 
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  

——————–

 
4. The government borrowed more than expected last month.
 

Back to Index

 

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  

——————–

 
7. China is punishing Lithuania for allowing Taiwan to open a de-facto embassy in Vilnius.
 
Source: Bloomberg   Read full article  

Back to Index

 

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  

Back to Index

 

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  

——————–

 
3. Hong Kong’s inflation remains subdued.
 

Back to Index

 

Emerging Markets

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

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

——————–

 
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  

——————–

 
4. US equities and the dollar are the key drivers of EM equity returns.
 
Source: TS Lombard  

Back to Index

 

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  

Back to Index

 

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  

——————–

 
3. The divergence between the dollar and commodities persists.
 
Source: PGM Global  

Back to Index

 

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  

——————–

 
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  

Back to Index

 

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.
 

——————–

 
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.
 

Back to Index

 

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.
 

——————–

Back to Index

 

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  

——————–

 
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:
 

——————–


Back to Index