The Daily Shot: 22-Aug-22
• The United States
• The United Kingdom
• The Eurozone
• Asia – Pacific
• China
• Emerging Markets
• Cryptocurrency
• Commodities
• Energy
• Equities
• Credit
• Rates
• Global Developments
• Food for Thought
The United States
1. Let’s begin with the housing market.
• Housing inventories are running at last year’s levels.
However, the situation is much worse when measured in months of supply (the difference is due to slower home sales).
Active listings from Realtor.com are well above last year’s level.
• Builders have been reducing prices.
Source: @johnburnsjbrec
• The end of the housing cycle or just a pause?
Source: @RickPalaciosJr
• The housing slump will pressure retail sales in some sectors.
Source: Pantheon Macroeconomics
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2. Next, we have some updates on the labor market.
• Job offshoring has been limiting price gains in the US over the past few decades.
Source: TS Lombard
But the offshoring trend is now reversing, which is likely to be inflationary.
Source: @jessefelder, @WSJ Read full article
• Labor costs point to persistent price pressures ahead.
Source: Nordea Markets
• Labor constraints remain a key concern for companies.
Source: @acemaxx, @ines_ferre, @YahooFinance Read full article
• More Americans hold two or more full-time jobs.
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3. There are signs of increasing financial distress among US households.
Source: Hugo Ste-Marie, Portfolio & Quantitative Strategy Global Equity Research, Scotia Capital
Consumer sentiment resumed its downward trend.
Source: @HPS_CS, @HPSInsight, @CivicScience
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4. CEO confidence has been deteriorating, …
… as business conditions weaken.
Source: Morgan Stanley Research
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5. Fed officials have been jawboning rate expectations higher.
Source: @WSJ Read full article
Here is the latest market-implied fed funds rate trajectory.
Even if inflation declines quickly, it may take much longer for the Fed to cut rates than the market currently expects.
Source: MRB Partners
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The United Kingdom
1. Rate hike expectations continue to climb, …
… sending short-term gilt yields to multi-year highs.
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2. UK Inflation is outpacing the Eurozone.
Source: Pantheon Macroeconomics
3. New lows in consumer confidence point to further weakness in retail sales.
Source: Capital Economics
4. Here are the contributions to labor market inactivity.
Source: ING
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The Eurozone
1. Let’s begin with Germany.
• The PPI hit 37% in July, topping forecasts.
But there are some hopeful signs when energy is excluded.
Source: Commerzbank Research
• Monthly natural gas consumption is moving lower.
Source: Deutsche Bank Research
• Companies continue to face labor shortages
Source: Commerzbank Research
• Germany’s labor costs are reducing competitiveness.
Source: ING
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2. French nuclear power output continues to fall.
3. Dutch consumer sentiment has collapsed.
4. Recession ahead?
Source: Capital Economics
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Asia – Pacific
1. Dollar-yen is moving higher after breaking resistance at the 50-day moving average.
Source: barchart.com
2. South Korea’s trade deficit widened to a new record in August as energy costs take a toll.
The won hit a multi-year low vs. USD.
3. The Taiwan dollar is weaker as well.
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China
1. The PBoC cut mortgage rates to support the housing market.
Property loans declined last quarter for the first time in years.
h/t @kristyhung122
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2. Industrial profits are starting to stabilize, which could benefit earnings growth.
Source: Oxford Economics
3. Youth unemployment remains elevated.
Source: Bloomberg Read full article
4. How much will China’s growth slow this year?
Source: Bloomberg Read full article
5. Are foreigners returning to China’s debt markets?
Source: @WSJ Read full article
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Emerging Markets
1. Mexico’s retail sales unexpectedly declined in June.
2. Brazil’s economic growth has been underperforming for decades.
Source: World Economics
3. Turkey relies heavily on external financing.
Source: Capital Economics
4. The Philippine central bank hiked rates last week as inflation jumped.
Source: ING
5. EM equities are at support relative to the US.
6. Next, we have some performance data from last week.
• Currencies:
• Equity ETFs:
• Local-currency bond yields:
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Cryptocurrency
1. Ether underperformed over the weekend.
2. The stablecoin market capitalization has peaked for now.
Source: Brookings Read full article
3. Where will bitcoin be at the end of the year? This distribution is based on a survey from Evercore ISI.
Source: Evercore ISI Research
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Commodities
Here is last week’s performance across key markets.
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Energy
1. Russia completely shut off Nord Stream gas flows to Europe.
Source: @WSJ Read full article
European natural gas futures are up 10% this morning (a record high).
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2. US natural gas futures tested resistance last week at the previous peak.
US natural gas inventories have been tightening.
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Equities
1. Equity futures are heavy this morning on Fed outlook.
2. Elevated real rates don’t bode well for near-term performance (2 charts).
Source: @TheTerminal, Bloomberg Finance L.P.
Source: Capital Economics
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3. A short-term rejection of the 200-day moving average typically precedes market declines.
Source: SentimenTrader
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4. US stocks continue to widen their gap with global shares.
5. Leveraged funds have been rapidly boosting their hedges (cutting exposure).
6. Equities tend to struggle when consensus earnings revisions decline.
Source: Oxford Economics
Source: Evercore ISI Research
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7. Here is the attribution of this year’s global market performance.
Source: Oxford Economics
8. Stocks face a challenging seasonal pattern ahead.
Source: Goldman Sachs; @WallStJesus
9. The Reddit chatter has been surging.
Source: Vanda Research
Retail investors continue to buy stocks.
Source: Vanda Research
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10. US dividend-focused funds registered substantial inflows this year.
Source: EPFR Global Navigator
11. Cancelled mergers are forcing more SPACs to return money to investors.
Source: Bloomberg Read full article
12. Finally, we have some performance data from last week.
• Sectors:
• Factors:
• Thematic ETFs:
• The largest US tech companies:
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Credit
Credit markets declined across the board last week.
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Rates
1. Will china’s falling bond yields pull Treasury yields lower?
Source: Alpine Macro
2. Sovereign bond yields have broken above a long-term downtrend.
Source: MRB Partners
For now, the rally in yields has paused.
Source: MRB Partners
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Global Developments
1. China’s construction slump is impacting global industrial demand.
Source: Gavekal Research
2. Deglobalization will put upward pressure on prices.
Source: TS Lombard
3. This chart shows labor productivity in advanced economies.
Source: Capital Economics
4. Which countries’ housing markets are most vulnerable to rising rates?
Source: BCA Research
5. Finally, we have some performance data from last week.
• Trade-weighted currency indices:
• Bond yields:
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Food for Thought
1. Global e-commerce revenue:
Source: Statista
2. On-demand streaming services pricing:
Source: @axios Read full article
3. Research coverage of the EV sector:
Source: S&P Global Market Intelligence
4. Agriculture as a share of state GDP:
Source: Wells Fargo Securities
5. Inflation-adjusted college tuition in the US:
Source: @LizAnnSonders, @DataArbor
6. Lobbying spending:
Source: @WSJ Read full article
7. Increasing dominance of PG-13 movies …
Source: @axios Read full article
… and a slump in R-rated films:
Source: @chartrdaily
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