The Daily Shot: 30-Mar-21
• The United States
• The United Kingdom
• Europe
• Japan
• China
• Emerging Markets
• Commodities
• Energy
• Equities
• Credit
• Rates
• Food for Thought
The United States
1. The Dallas Fed manufacturing report (the last of the regional surveys for the month) further validated continued strength in the nation’s factory activity.
• The index of capacity utilization hit a record high.
• And workers’ weekly hours climbed sharply.
• Supplier delivery times spiked (a global trend).
But manufacturers expect these supply-chain bottlenecks to ease over the next few months.
• Prices increases are accelerating.
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2. Here is a summary of price indices for all the regional manufacturing reports.
Source: Yardeni Research
The spread between indices of prices paid and prices charged keeps widening. Without further boosting output prices, some manufacturers could face margin pressures.
Source: Yardeni Research
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3. One of the primary supply-chain issues has been semiconductors (a global disruption).
Source: Bloomberg Read full article
That’s part of the reason US auto production has slowed this year.
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4. The Treasury curve continues to steepen.
Based on historical data, the yield curve slope suggests that US manufacturing activity will peak this summer.
Source: @AndreasSteno
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5. Moody’s Analytics expects a rebound in productivity during this decade.
Source: Moody’s Analytics
6. Next, we have some updates on the labor market.
• The “effective” unemployment rate is substantially higher than the headline figures.
Source: BofA Global Research
• COVID forced many older workers into retirement. How many will return after the pandemic ends?
Source: @WSJ Read full article
Source: @WSJ Read full article
• BofA expects US labor force participation to return to pre-COVID levels by the end of next year.
Source: BofA Global Research
• Improving mobility trends suggest that hiring has picked up this month.
Source: BofA Global Research
Airport travel hit the highest level in a year.
• Hotel occupancy is returning to normalcy.
Source: ANZ Research
And high-frequency data show rapid increases in hospitality-sector hiring.
Source: homebase
• There should be a similar rebound in restaurant hiring.
Source: Morgan Stanley Research
• Some of these lost jobs are coming back quickly.
Source: Barclays Research
• Job postings on Indeed point to rising demand for workers.
Source: @JedKolko, @indeed Read full article
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7. How do you plan to spend the $1,400 government check?
Source: @axios Read full article
8. With all the help from Uncle Sam, personal bankruptcy filings have been declining.
Source: @WSJ Read full article
9. US bank deposits hit another record high.
10. Finally, we have some data on vaccination progress.
Source: Barclays Research
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The United Kingdom
1. Mortgage approvals slowed last month, but economists expect a rebound going forward.
Online search activity points to rising demand for housing.
Source: Pantheon Macroeconomics
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2. Consumer credit is down 10% from a year ago as households cut back on credit card debt (similar to the US).
3. The broad money supply expansion is at multi-year highs.
4. Business sentiment is rebounding.
5. The pace of vaccinations remains robust.
Source: Barclays Research
Hospitalizations are down sharply.
Source: Barclays Research
The UK’s vaccine progress is part of the reason the pound keeps strengthening vs. the euro.
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Europe
1. Italy’s debt-to-GDP ratio rose sharply over the past year.
Source: @bpolitics Read full article
And more increases are on the way.
Source: @markets Read full article
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2. The ECB announced that the 33% issuer limit would not apply to emergency asset purchases (PEPP), giving the central bank more flexibility to buy debt.
Source: @fwred
3. Here are some economic forecasts for Germany.
Source: Deutsche Bank Research
4. Sweden’s retail sales rebounded last month.
5. The third COVID wave will be a drag on growth.
Source: Longview Economics
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Japan
1. February’s retail sales surprised to the upside.
2. The jobs-to-applicants ratio ticked lower last month.
But the unemployment rate is also drifting lower.
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3. USD/JPY is testing resistance.
h/t Michael G Wilson
4. Here is Japan’s energy mix over time (2 charts).
Source: Statista
Source: The Economist Read full article
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China
1. The China-US bond spread continues to tighten, which could put downward pressure on the renminbi.
2. US ADRs of Chinese companies have declined in recent weeks.
h/t @KritiGuptaNews
3. Semiconductor private equity deals hit a record high last year.
Source: @WSJ Read full article
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Emerging Markets
1. EM currencies have been rolling over.
Source: Danske Bank
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2. The Turkish lira continues to weaken.
3. The Philippine labor market recovery has stalled.
4. Malaysia’s exports surprised to the upside.
5. Some Asian countries see a spike in COVID cases.
Source: Statista
6. Brazil’s COVID situation continues to worsen.
Bolsonaro ousted more top ministers in response (it’s unclear how that could help).
Source: @bpolitics Read full article
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7. Chile’s business confidence remains strong.
8. EM equities have been underperforming developed markets as the dollar strengthens.
Source: Danske Bank
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Commodities
1. CTA exposure to gold turned negative as the price uptrend has weakened since January.
Source: Deutsche Bank Research
2. 86% of the world’s commodities (ex-energy and gold) are generating positive year-over-year gains, the highest since March 2011.
Source: Arbor Research & Trading
3. US farmland prices strengthened last year as grain prices surged.
Source: @WSJ Read full article
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Energy
1. Global diesel prices are approaching pre-pandemic levels.
Source: Fitch Solutions Macro Research
2. This chart shows oil majors’ CapEx over time.
Source: @jessefelder, @johnauthers, @bopinion Read full article
3. Hydrogen energy stocks have been struggling in recent weeks.
Source: @WSJ Read full article
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Equities
1. Small caps have been underperforming.
Leveraged funds have been bearish on small caps while asset managers are long.
Source: @WallStJesus
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2. Nonprofitable tech companies slumped over the past month.
Valuations have been extreme.
Source: @jessefelder, The Leuthold Group Read full article
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3. The Archegos Capital situation put some pressure on bank shares.
Here is Credit Suisse over the past month.
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4. Median singe-stock PE ratios are high across equity markets in the US and Europe.
Source: Longview Economics
The proportion of US stocks with a PE ratio above 20 is at an extreme.Â
Source: Longview Economics
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5. 2021 has been good to value shares.
Source: @WSJ Read full article
6. Merrill Lynch’s private clients have been cutting back on equity exposure.
Source: BofA Global Research, @WallStJesus
7. The S&P 500 dividend yield remains below the 10yr Treasury yield.
Source: Piper SandlerÂ
8. History indicates that markets are vulnerable to a summer sell-off.
Source: MarketDesk Research
9. Here is the Nasdaq Composite vs. the Startups Barometer.
Source: Andrew Rummer
10. Insiders are no longer selling.
Source: @ISABELNET_SA
11. A basket of stocks with the highest call option exposures has turned down sharply since mid-February.
Source: Deutsche Bank Research
12. Call option volume continues to moderate.
Back to Index
Credit
1. US high-yield bond spreads are hovering near the lows.
2. High-yield issuance hit a record high.
Source: Bloomberg Read full article
3. Leveraged loan volume rose sharply this quarter.
Source: S&P Global Market Intelligence
4. Median high-yield company leverage is now at pre-COVID levels. But enterprise multiples are elevated.
Source: CreditSights
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Rates
1. Treasury yields resumed their ascent.
The curve is rapidly steepening in the intermediate maturities.
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2. CTA exposure to government bonds turned negative, reacting to the trend reversal in yields.
Source: Deutsche Bank Research
3. Here is the seasonal pattern for Treasuries.
Source: Guggenheim
4. Next, we have some yield forecasts.
• Capital Economics:
Source: Capital Economics
• Evercore ISI:
Source: Evercore ISI
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5. Will Treasury yields catch up to reflation proxies?
Source: Deutsche Bank Research
6. Treasuries and agency MBS held by banks keep climbing.
7. Here is the 10-year US breakeven rate vs. previous economic recoveries.
Source: Arbor Research & Trading
8. Overnight repo rates are trading near (or below) zero. Will the SOFR index hit zero as well?
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Food for Thought
1. Container ship size growth (2 charts):
Source: @financialtimes Read full article
Source: @financialtimes Read full article
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2. China’s population in perspective:
Source: Visual Capitalist Read full article
3. The benefits of performing well on China’s most important academic exam:
Source: The Economist Read full article
4. US life expectancy by race/ethnicity:
Source: PNAS Read full article
5. Ideological composition of Iran’s parliament:
Source: BCA Research
6. Hospital beds vs. the share of older population:
Source: Oxford Economics
7. Biden’s revenue and spending plans:
Source: Scotiabank Economics
8. US political news sources:
Source: Pew Research Center Read full article
9. Split US Senate delegations:
Source: Pew Research Center Read full article
10. EVs as a share of new passenger cars:
Source: Statista
11. Film rating vs. duration:
Source: r/dataisbeautiful
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