Excess retirements persist

The Daily Shot: 07-Feb-23
The United States
Canada
The United Kingdom
The Eurozone
Europe
Japan
Emerging Markets
Cryptocurrency
Commodities
Energy
Equities
Credit
Rates
Global Developments
Food for Thought



 

The United States

1. Let’s start with some additional data on the labor market.
 
This chart shows the total nonfarm payrolls without seasonal adjustments.
 

 
Payroll figures surprised to the upside for ten months in a row.
 
Source: @bespokeinvest, h/t @dailychartbook  
 
Low snowfall in January boosted the payrolls figure.
 
Source: Pantheon Macroeconomics  
 
Excess retirements persist.
 
Source: Deutsche Bank Research  
 
Employment in some sectors hasn’t yet recovered from COVID-related losses.
 
Source: Oxford Economics  
 
Here is an example.
 

 
Below are some trends in wage growth.
 
Wage growth of nonsupervisory employees:
 
Source: @WSJ   Read full article  
 
Wage growth by industry:
 
Source: Oxford Economics  
 
Weekly earnings (boosted by more hours):
 
Source: Oxford Economics  

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2. Next, we have some updates on inflation.
 
Gains in labor costs will keep services inflation elevated (2 charts).
 
Source: Wells Fargo Securities  
 
Source: MRB Partners  
 
Instantaneous inflation, which puts more weight on recent observations, is back near 2%.
 
Source: Jan Eeckhout/UPF Barcelona   Read full article  
 
Inflation has peaked, similar to past cycles.
 
Source: TS Lombard  
 
Here is the ISM Services PMI price index vs. the CPI.
 
Source: Oxford Economics  
 
Below is the PCE inflation forecast from Nomura.
 
Source: Nomura Securities  

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3. Rental vacancies are grinding higher, …
 
Source: Apartment List  
 
… as apartment market tightness eases.
 
Source: Calculated Risk  

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4. The GDP impact of tightening financial conditions (which peaked in mid-2022) should ease this year.
 
Source: Goldman Sachs  


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Canada

1. The Ivey PMI rebounded last month, signaling an improvement in business activity.
 

 
2. Canada’s housing prices outperformed most other markets.
 
Source: Capital Economics  
 
Here is a forecast for Canada’s housing affordability index from Oxford Economics.
 
Source: Oxford Economics  


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The United Kingdom

1. Construction activity moved deeper into contraction territory last month, …
 

 
… driven by weakness in the housing market.
 

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2. Car sales improved relative to last year, boosted by EVs.
 

 
Source: The Guardian   Read full article  


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The Eurozone

1. The Sentix indicator of investor confidence continues to rebound.
 

 
Source: RTT News   Read full article  

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2. Retail sales took a hit in December.
 

 
3. Germany’s factory orders jumped in January.
 

 
But industrial production surprised to the downside.
 

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4. Euro-area financial stocks are improving in absolute and relative terms.
 
Source: MRB Partners  


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Europe

1. The Swedish krona has been under pressure (chart shows EUR gaining against SEK).
 

 
Source: @LibbyCherry98, @markets   Read full article  
 
The Norway krone’s decline has been sharp, …
 

 
… dragged lower by the yield differential with the euro.
 
Source: Nordea Markets  

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2. Below is an illustration of member-state contributions to the EU economy.
 
Source: Visual Capitalist   Read full article  
 
3. This chart shows the median length of European governments.
 
Source: Pew Research Center   Read full article  


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Japan

1. The 10-year JGB is testing the BoJ’s 50 bps cap again.
 

 
The BoJ has been forced to buy massive amounts of debt to maintain the cap on yields.
 
Source: Barclays Research  

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2. Nominal wages surged in December.
 

 
Source: @erica_yokoyama, @economics   Read full article  
 
Real earnings growth moved back into positive territory.
 


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Emerging Markets

1. The Philippine CPI continues to surge, topping forecasts.
 

 
2. Brazil’s trade surplus is expected to weaken.
 
Source: Macrobond  
 
3. EM equities underperformed in recent days in dollar terms.
 

 
4. EM government bond issuance surged last month.
 
Source: @WSJ   Read full article  
 
5. This chart shows EM rate hike cycles relative to the Fed.
 
Source: Wells Fargo Securities  
 
6. Will inflation be back to central banks’ targets by Q3?
 
Source: Oxford Economics  


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Cryptocurrency

1. Bitcoin’s price rally stalled around $24K resistance.
 
Source: Glassnode   Read full article  
 
2. The average bitcoin holder is experiencing unrealized profits, driven by the recent price rally.
 
Source: Glassnode   Read full article  
 
3. Crypto investment products had a fourth consecutive week of inflows.
 
Source: CoinShares   Read full article  
 
Long-bitcoin funds accounted for most inflows last week, while multi-asset funds continued to see outflows.
 
Source: CoinShares   Read full article  


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Commodities

Funds continue to boost their bets on copper …
 

 
… and gold.
 

 
Bets against wheat futures are hitting extreme levels.
 


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Energy

1. Longview Economics isn’t buying the optimistic forecasts for oil demand from OPEC and IEA.
 
Source: Longview Economics  
 
2. China’s oil intake has recovered somewhat over the last two months, but remains below previous highs.
 
Source: Alpine Macro  
 
3. The copper price has sharply diverged from the Brent oil price.
 
Source: Alpine Macro  
 
4. EU natural gas in storage remain well above the 10-year average.
 
Source: @JKempEnergy  
 
5. US retail electricity prices surged last year.
 
Source: @hedgeye, h/t @dailychartbook  


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Equities

1. Technicians see strong resistance at 4,200 for the S&P 500.
 

 
Source: Barron’s   Read full article  

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2. The Deutsche Bank Consolidated Positioning index is approaching neutral territory.
 
Source: Deutsche Bank Research  
 
3. Goldman expects flat earnings and no price changes this year for the S&P 500.
 
Source: Goldman Sachs  
 
4. Q4 earnings growth is negative on a year-over-year and quarter-over-quarter basis.
 
Source: Deutsche Bank Research  
 
Earnings growth is still negative when excluding banks’ loan loss provisions and energy.
 
Source: Deutsche Bank Research  

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5. Companies with significant exposure to the US government have widened their underperformnce.
 

 
Here is how they perform around debt-limit deadlines.
 
Source: Goldman Sachs  

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6. The equal-weight S&P 500 index underperformed in recent days.
 

 
How does the equal-weight index differ from the cap-weighted one in terms of sector exposure?
 
Source: S&P Dow Jones Indices  

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7. The tech mega-cap bounce from the lows has been impressive.
 
Source: @bespokeinvest   Read full article  
 
8. Profits typically peak before wages.
 
Source: PGM Global  
 
9. Next, we have the year-to-date US equity fund flows by fund group.
 
Source: EPFR  
 
10. SPAC IPO activity collapsed at the end of last year. But SPAC M&A deal volume increased.
 
Source: S&P Global Market Intelligence  
 
11. Stocks remain inversely correlated to the US dollar.
 


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Credit

1. US high-yield spreads have tightened significantly in recent months.
 
Source: @lisaabramowicz1  
 
2. Banks are widening spreads and tightening underwriting standards for business loans.
 
Source: @NickTimiraos  
 
3. US loan loss provisions have been rising.
 
Source: TS Lombard  
 
4. MBS spreads have tightened as bond market volatility eased.
 
Source: Oxford Economics  


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Rates

1. At 4.6%, fed funds have been a popular instrument.
 
Source: @WSJ   Read full article  
 
2. Foreign demand for Treasuries strenghened in December.
 
Source: Deutsche Bank Research  
 
3. SOFR derivatives volume surged on CME last month.
 
Source: CME; @BrianGierke  


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Global Developments

1. Asset managers have been boosting their bets against the US dollar.
 
Source: Deutsche Bank Research  
 
2. Here is the Economist’s Big Mac index. Negative numbers indicate that a currency is undervalued relative to USD (in %).
 
  Read full article  
 
3. Policy rates are still below current levels of inflation in countries where deviations in headline inflation from targets are large.
 
Source: Codera Analytics  


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Food for Thought

1. Broadway show attendance and movie theater visits:
 
Source: Torsten Slok,¬†Apollo  
 
2. Dating app usage:
 
Source: @OpenAxisHQ  
 
3. COVID-era US construction spending trends:
 
Source: @WSJ   Read full article  
 
4. Inflation by income decile:
 
Source: @WSJ   Read full article  
 
5. Monthly car payments:
 
Source: @WSJ   Read full article  
 
6. The Chinese spy balloon’s path across North America:
 
Source: Statista  
 
7. US defense pacts:
 
Source: u/earththejerry  
 
8. Reasons people use Twitter:
 
Source: @OpenAxisHQ  
 
9. Biggest movies of 2022 globally (by revenue):
 
Source: @Datawrapper, @elliot_bentley  

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