The Daily Shot: 05-Apr-22
• The United States
• Canada
• Europe
• Asia – Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Global Developments
• Food for Thought
The United States
1. Let’s begin with the housing market.
• Housing demand remains strong despite the recent spike in mortgage rates.
Source: Redfin
More than half of US homes are sold above the list price.
Source: Redfin
But second homes saw a pullback in demand.
Source: Bloomberg Read full article
• Prices continue to climb, …
Source: Redfin
… pressuring affordability (2 charts).
Source: Standard Chartered Global Research; @MikeZaccardi
Source: Redfin
• Demand for apartments has been surging.
Source: @jayparsons
• Rents have been rising quickly, …
… but renting is increasingly cheaper than buying.
Source: @RickPalaciosJr
The price-to-rent ratio does not bode well for home price appreciation going forward.
Source: @jessefelder, @DallasFed Read full article
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2. Next, let’s take a look at some inflation trends.
• The core PCE inflation (the Fed’s preferred measure):
• A comparison to previous inflation spikes:
Source: MUFG
• Consumer services PPI (upstream) vs. the PCE services inflation (downstream):
Source: Capital Economics
• The commodity price shock (% of consumer spending):
Source: Goldman Sachs
• Consumers are spending $3k more per year to maintain the pre-pandemic consumption trend.
Source: Mizuho Securities USA
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3. Now, let’s take a look at a couple of labor market trends.
• Retired workers are returning to the labor force, pulled by inflation and higher wages.
Source: @WSJ Read full article
• The jobs/workers gap shows unusual tightness in the labor market.
Source: Goldman Sachs; @AnsteyAsia Read full article
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4. US factory orders have been very strong.
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Canada
1. Consumer confidence is now below pre-COVID levels.
2. Business outlook slumped in the first quarter.
Supply/capacity issues have worsened, with more companies saying they would be unable to meet an increase in demand.
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3. Building permits surged in February.
4. Unlike in the US, Canada’s small caps outperformed last month.
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
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Europe
1. The Sentix index of euro-area investor confidence has deteriorated sharply.
2. German exports hit a record high.
3. The Swiss franc looks set to make another run at parity with the euro.
The Swiss central bank appears to be intervening in the F/X market to keep the currency from appreciating further.
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4. This chart shows Europe’s energy burden relative to the US.
Source: BlackRock Investment Institute
5. Finally, here is a look at tax subsidies for R&D.
Source: @TaxFoundation, @danieldbunn Read full article
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Asia – Pacific
1. Japan’s household spending has been slowing again.
2. South Korea’s inflation continues to rise.
3. Aussie-Yen hit the highest level since 2015.
Source: FXStreet Read full article
Australia’s 2-year yield is nearing 2%.
4. Australian consumer confidence seems to have stabilized.
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China
1. While the authorities are denying it, the Shanghai Port is facing increasing logistics bottlenecks.
Source: South China Morning Post Read full article
Source: VesselsValue
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2. Tech stocks rallied yesterday on Beijing’s decision to allow some firms to “comply” with US audit rules. But is it enough to keep US-listed firms in the US?
Source: South China Morning Post Read full article
3. Equity valuations are at the lowest level since 2018.
Source: UBS Research
4. Mobility in Shenzhen is improving.
Source: UBS Research
5. The options market is pricing in higher downside risks for the renminbi.
Source: UBS Research
6. According to TS Lombard, China’s GDP is facing a significant slowdown.
Source: TS Lombard
7. The debt/GDP ratio has accelerated since the financial crisis, outpacing the US.
Source: TS Lombard
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Emerging Markets
1. Let’s begin with South Africa.
• The manufacturing PMI hit a record high.
• The trade surplus was softer than expected in February.
• Vehicle sales surged last month.
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2. Turkey’s manufacturing is back in contraction.
Core inflation is nearing 50%.
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3. India’s manufacturing activity remains resilient.
Source: IHS Markit
4. Thailand’s inflation has picked up momentum.
5. Some LatAm equity markets look attractive as earnings expectations outpace price gains.
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
6. The relative performance of the MSCI EM stock index versus the MSCI Global Equity Index is inversely tied to the dollar.
Source: Fitch Solutions Macro Research
By the way, here are the weights in the MSCI EM stock index over time.
Source: Goldman Sachs; @ritholtz Read full article
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7. EM sovereign bond returns have been weak over the past twelve months.
Source: MarketDesk Research
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Cryptocurrency
1. Ether’s put/call ratio is trending higher this year, with a notable increase around the end of March.
Source: Skew Read full article
2. The ETH/BTC price ratio is testing initial resistance.
Source: CoinDesk Read full article
3. Indonesia and Brazil have the highest crypto ownership rates, according to data from Gemini.
Source: Gemini Read full article
Here is another global survey.
Source: Statista
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4. Relatively few crypto users use cryptocurrencies to purchase goods or services.
Source: S&P Global Market Intelligence
5. This map shows the most searched cryptos on Google in each state.
Source: @coininsidercom
6. Crypto funds saw $180 million in inflows last week.
Source: CoinShares Read full article
Bitcoin-focused funds accounted for the majority of inflows last week. Ethereum-focused funds also attracted capital, although net flows remain negative for the year.
Source: CoinShares Read full article
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7. Which US department will oversee crypto trading platforms?
Source: CoinDesk Read full article
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Commodities
1. Commodity ETF flows surged in March.
Source: SPDR Americas Research, @mattbartolini
2. Who are the largest exporters of steel?
Source: Bloomberg Read full article
3. Here is the distribution of ownership of above-ground gold.
Source: Alpine Macro
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Energy
1. Crude oil prices have been consolidating.
2. New York Harbor jet fuel prices have gone vertical.
Source: @JavierBlas
3. Global crude oil inventories continue to shrink.
Source: Goldman Sachs; @OpenSquareCap
4. Natural gas flows from Russia to Europe via Ukraine hit the highest level since November.
h/t @JavierBlas
5. Russia’s Gazprom output changed little month-over-month and year-over-year despite uncertainty over sanctions and payment terms (yet).
Source: Nadia Kazakova, REA Research Read full article
Gazprom’s sales to regional consumers via the company’s pipeline network have declined year over year.
Source: Nadia Kazakova, REA Research Read full article
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6. The top five importers of US LNG last year are all set to see growth in LNG demand this year.
Source: Fitch Solutions Macro Research
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Equities
1. The yield curve tends to flatten/invert over a year before the maximum drawdown in the S&P 500.
Source: MarketDesk Research
2. Mega-cap valuations remain elevated.
Source: J.P. Morgan Asset Management
3. Equity hedge funds have been reducing their exposure, missing the market rebound.
Source: Goldman Sachs Read full article
4. Returns dispersion has been climbing.
Source: BlackRock Investment Institute
5. New lows keep outpacing new highs.
Source: @WillieDelwiche
6. Investor surveys continue to signal caution.
Source: JP Morgan Research; @WallStJesus
7. Small caps keep widening their underperformance, with value stocks lagging the most.
Small caps tend to outperform during periods of stagflation.
Source: BofA Global Research; @MikeZaccardi
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8. Speculative activity is coming back as the most-shorted names outperform.
9. Next, we have some sector updates.
• Financials:
• Industrials:
• Transportation:
• Tech:
• Communication Services:
Source: CNBC Read full article
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The S&P 500 utilities sector was in the top decile of its performance history, which typically leads to dramatic underperformance over the next year, according to Fidelity.
Source: Denise Chisholm, Fidelity Investments
Back to Index
Credit
1. Nonfinancial corporates have seen the largest decline in bond issuance so far this year.
Source: S&P Global Ratings
Still, even a 35% decline in issuance would keep nonfinancial issuance on track with its long-term growth rate.
Source: S&P Global Ratings
2. High-yield flows finally turned positive last week.
Source: @lcdnews Read full article
3. Corporate secondary bond yields are back to pre-pandemic levels after falling to historic lows.
Source: S&P Global Ratings
4. Leveraged loan issuance heavily favored investors in March.
Source: @lcdnews
5. Q1 CLO issuance wasn’t bad considering SOFR implementation and the war.
Source: @lcdnews
CLO AAA spreads are starting to come in.
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Global Developments
1. Negative yields are quickly disappearing.
Source: @RichardDias_CF
2. Growth in global manufacturing activity has been slowing.
Source: IHS Markit
Here are the latest PMIs by country.
Source: IHS Markit
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Food for Thought
1. US population growth by county:
Source: U.S. Census Bureau
2. Married households as a share of total households:
Source: USAFacts Read full article
• Median age of first marriage:
Source: USAFacts Read full article
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3. Rental vacancy rates vs. homelessness:
Source: @TaylorAMarr, @ColburnGregg
4. Food prices and terrorism:
Source: Chart and data provided by Macrobond
5. Russia’s most downloaded apps in March (most used for private communications and internet browsing):
Source: Statista
6. THC- vs. CBD-infused products:
Source: @MorningConsult Read full article
7. Who is divesting from fossil fuels?
Source: @BloombergNEF Read full article
8. How to say “beer” around Europe?
Source: Feòrag NicBhrìde, Wikimedia
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