Posted on by The Daily Shot Editor: Lev Borodovsky

Americans with a college degree are increasingly concerned about employment

The Daily Shot: 12-Jul-22
• The United States
• Canada
• The Eurozone
• 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 updates on the labor market.
 
• Labor force participation eased in June.
 
Source: Chart and data provided by Macrobond  
 
Is COVID still an issue?
 
Source: @WSJ   Read full article  
 
• Here are the June payroll gains by sector.
 
Source: Scotiabank Economics  
 
• This chart shows wage growth trends by sector.
 
Source: The New York Times   Read full article  
 
• Service jobs are still lagging.
 
Source: @WSJ   Read full article  
 
• The number of people working part-time for economic reasons hit a multi-year low (reducing underemployment).
 
Source: @WSJ   Read full article  
 
• The share of women on payrolls is nearing 50% again.
 

 
• The percentage of Americans who are self-employed remains elevated.
 
Source: Federal Reserve Bank of St. Louis   Read full article  
 
• The payrolls report revisions have been negative in recent months.
 
Source: Quill Intelligence  
 
There are a couple of indicators that point to potential cracks in an otherwise hot labor market.
 
• The household survey showed job losses, diverging from the headline establishment survey. One of the differences is that the household survey includes “off-payroll” work.
 

 
• The NY Fed’s national survey signals increasing concerns about employment, especially among Americans with a college degree.
 
Source: NY Fed  

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2. The yield curve inversion hit the worst level since 2006.
 

 
3. The broad money supply has decreased over the past three months.
 
h/t Deutsche Bank Research  
 
Deteriorating liquidity tends to slow economic growth. Here is the narrow money supply (M1).
 
Source: Longview Economics  

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4. Excess residential and corporate investment typically precede recessions. For now, investment levels are still below prior peaks.
 
Source: J.P. Morgan Asset Management  
 
5. Next, we have some updates on inflation.
 
• A stronger US dollar should help ease goods inflation.
 

 
• The stock market is increasingly concerned about recession rather than inflation. Companies that benefit from rising prices have underperformed recently.
 

 
• The market says that the CPI has peaked. Again.
 
Source: JP Morgan Research; @carlquintanilla  
 
• Will we see a pullback in food inflation?
 
Source: Piper Sandler   
 
• Falling corporate margins should pull inflation lower.
 
Source: Pantheon Macroeconomics  

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Canada

1. Consumer confidence continues to deteriorate.
 

 
2. More stocks are below their 200-day moving average and making new lows in the TSX Composite.
 
Source: Aazan Habib; Paradigm Capital  
 
3. Unlike the US, household savings remain above pre-pandemic levels.
 
Source: Economics and Strategy Group, National Bank of Canada  

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The Eurozone

1. The euro is about to break parity.
 

 
A weak currency can be an advantage if you run a trade surplus. It’s painful in a deficit scenario.
 
Source: Pantheon Macroeconomics  
 
Euro implied volatility has been climbing.
 

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2. The euro used to be correlated with oil prices. Not anymore.
 
Source: @TheTerminal, Bloomberg Finance L.P.  
 
3. Here is the projected path for the ECB policy rate.
 
Source: @WeberAlexander, @markets   Read full article  
 
4. Economic forecasts increasingly point to stagflationary risks next year.
 
• 2023 growth projections:
 

 
• 2023 CPI projections:
 

 
Here are the 2023 projections for France.
 

 

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5. Chinese demand for eurozone goods has waned at the same time Eurozone import prices for Russian energy have surged (boosting trade deficit).
 
Source: PGM Global  

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Asia – Pacific

1. Japan’s PPI continues to surprise to the upside.
 

 
2. Australia’s business confidence has been deteriorating.
 

 
Consumer confidence is approaching the 2020 lows.
 

 
But Australian household spending intentions remain robust.
 

Back to Index

 

China

1. Bank lending surged in June.
 

 
Aggregate financing was well above forecasts as Bejing tries to accelerate economic growth after the lockdowns.
 

 
Source: ING  
 
Money supply indicators also topped expectations.
 

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2. Leveraged property developers remain under pressure.
 
Source: Fitch Ratings   Read full article  
 
3. Consumption remains weak, …
 
Source: MRB Partners  
 
… amid depressed consumer sentiment.
 
Source: TS Lombard  

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Emerging Markets

1. The Colombian peso is plummetting.
 

 
This is really going to help …
 
Source: @bpolitics   Read full article  
 
It’s worth noting that Colombia’s manufacturing activity accelerated last month.
 
Source: S&P Global PMI  

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2. Russia’s current account surplus hit another record high as energy sales surge.
 

 
3. The Philippine peso is at multi-year lows. Central bank governor Felipe Medalla wants the market to “determine” the peso’s value (translation: easy monetary policy).
 

 
A record trade deficit has exacerbated the situation.
 

Back to Index

 

Cryptocurrency

1. Bitcoin is back below $20k amid weakness in stocks.
 

 
2. Crypto investment funds saw inflows totaling $15 million last week, driven by US and Canadian exchanges (2 charts).
 
Source: CoinShares   Read full article  
 
Source: CoinShares   Read full article  
 
Bitcoin-focused funds saw minor outflows last week, while Ethereum-focused funds saw inflows.
 
Source: CoinShares   Read full article  

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Commodities

1. Industrial metals slump continues due to recession risks and a strong dollar.
 
• Aluminum:
 

 
• Copper:
 

 
• Bloomberg’s industrial metals index.
 

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2. Precious metals are also weaker.
 

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Energy

1. The Texas power grid is under pressure as the heat wave bears down on the Lone Star State.
 
Source: Bloomberg   Read full article  
 
2. The decline in US manufacturing conditions points to lower petroleum demand (non-gasoline).
 
Source: Longview Economics  
 
3. US industrial electricity prices remain elevated.
 
Source: Bloomberg   Read full article  
 
4. Are analysts underestimating Russia’s ability to restore its crude oil output?
 
Source: Princeton Energy Advisors  

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Equities

1. Earnings projections are rolling over, but are the downward adjustments sufficient?
 
h/t Lu Wang, Isabelle Lee, Bloomberg  
 
Source: BCA Research  
 
Unlike previous bear markets, significant earnings downgrades have yet to materialize despite falling stock prices.
 
Source: JP Morgan Research  

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2. Positioning remains bearish.
 
Source: Deutsche Bank Research  
 
Here is the aggregate equity futures positioning.
 
Source: Deutsche Bank Research  

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3. Valuations dispersion has been extreme.
 
Source: J.P. Morgan Asset Management  
 
4. More pain for global stocks from central banks’ quantitative tightening?
 
Source: III Capital Management  
 
5. At current valuations, small-cap returns could be attractive over the next decade.
 
Source: BofA Global Research; @MikeZaccardi  
 
6. The divergence between bank stocks’ relative performance and bond yields has been extreme.
 
Source: @TheTerminal, Bloomberg Finance L.P., h/t @jessefelder  
 
7. The energy sector price held support at the 200-day moving average.
 
Source: Truist Advisory Services  
 
Energy-sector valuations look attractive.
 
Source: Truist Advisory Services  

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8. Retail investors have been rotating out of the “retail tech basket” into tech mega-caps (which they consider a defensive play).
 
Source: Vanda Research  
 
9. The Reddit crowd is not limited to the US. Here are the most actively searched stocks on Google in the EU.
 
Source: CMC Markets  
 
10. US households haven’t been this bearish in a while.
 

 
11. Hedge funds had the worst month since the 2020 COVID shock.
 

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Rates

1. The 20yr Treasury yield is dislocated (investors looking for liquidity prefer the 10yr or the long bond).
 

 

 
Source: Bloomberg Law   Read full article  

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2. The 5yr, 5yr forward inflation swap rate (long-term inflation expectations) is testing support.
 
Source: @TheTerminal, Bloomberg Finance L.P.  

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Global Developments

1. Advanced economies registered outsize housing price gains over the past 12 months.
 
Source: Oxford Economics  
 
2. There are more job vacancies than unemployed people in the US, Germany and UK – a sign of tight labor markets.
 
Source: JP Morgan Research  
 
3. The Swiss watch price index points to tumbling demand for luxury goods.
 
Source: @watchcharts_com  

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Food for Thought

1. Floating wind installations:
 
Source: @BloombergNEF  
 
2. Global coal trade:
 
Source: @financialtimes   Read full article  
 
3. Countries’ wealth and importance of religion:
 
Source: Pew Research Center   Read full article  
 
4. Average age at marriage:
 
Source: @OpenAxisHQ   Read full article  
 
5. Suicide rates among US adolescents:
 
Source: KFF   Read full article  
 
6. Taiwan’s views on unification/independence:
 
Source: Election Study Center, NCCU  
 
7. Most common crop by county:
 
Source: Data Stuff  

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