Greetings, United States: How severe will the next quarter’s GDP decline be? Forecasts vary. Will we see a sharp rebound in the fourth quarter? Here is a forecast from Oxford Economics. Eurozone: Germany’s consumer confidence has collapsed. Equities: The Dow has officially exited bear market territory. Has the rebound been too quick? …
The Daily Shot Brief – March 26th, 2020
Greetings, United States: Mortgage applications for home purchase fell last week. Further declines are expected. Refi activity slowed as well as mortgage rates rose (see chart). Eurozone: What portion of the GDP is operational, disrupted, or fully shut? Energy: US gasoline crack spreads went negative this week as demand collapses. Equities: …
The Daily Shot Brief – March 25th, 2020
Greetings, United States: How severe are job losses in the US? Several economists expect the unemployment rate to hit levels not seen since the Great Depression – well above what we had in 2008. The spike in initial unemployment claims is expected to be unprecedented. Eurozone: Based on online search data, the Eurozone’s …
The Daily Shot Brief – March 24th, 2020
Greetings, United States: The Federal Reserve announced a new set of policy measures designed to stabilize the credit markets and cushion the economic contraction. The scope of some of these actions is unprecedented, going beyond what we saw in 2008. • Unlimited QE: Purchases of “Treasury securities and agency mortgage-backed securities in the amounts needed to …
The Daily Shot Brief – March 23rd, 2020
Greetings, United States: How big of a GDP decline should we expect in the second quarter? Projections vary. Below is the distribution of forecasts tracked by Bloomberg (some haven’t been updated yet). Here is JP Morgan’s forecast. And then there is Morgan Stanley. Eurozone: Germany seems to be following Italy’s coronavirus trajectory. …
The Daily Shot Brief – March 20th, 2020
Greetings, United States: Government stimulus should cushion the blow to the economy, with federal programs generating a substantial multiplier effect. United Kingdom: The Bank of England cut rates and launched a QE program. The second chart below shows the total stimulus represented as a rate cut (equivalent to 300 basis points). China: …
The Daily Shot Brief – March 19th, 2020
Greetings, Rates: Investors are flooding into Treasury bills, rapidly shrinking their portfolio durations. T-Bill yields have turned negative.. Credit: Credit markets are under severe pressure. Here are high-yield bond spreads: And investment-grade bond spreads: Commodities: Precious metals continue to struggle as investors give up on safe-haven assets. Emerging Markets: EM outflows …
The Daily Shot Brief – March 18th, 2020
Greetings, United States: Online search activity related to filing for unemployment has soared in recent days. Asia-Pacific: Japan’s recession is deepening. Energy: US crude oil dipped below $27/bbl while Brent is below $29. We are now near the 2016 lows. Separately, Germany has been slowing its investment in wind turbines. …
The Daily Shot Brief – March 17th, 2020
Greetings, Equities: The spread between the S&P 500 dividend yield and the 10yr Treasury reached a new high. The market expects companies to start cutting dividends. Credit: Will firms have trouble rolling their maturing debt? Which sectors are most exposed? China: Economic activity is gradually recovering. The housing market has …
The Daily Shot Brief – March 16th, 2020
Greetings, United States: Goldman Sachs is predicting deep contraction in growth. Here is the attribution. United Kingdom: It was a rough week for the British pound. Eurozone:The coronavirus trajectories in Spain and Italy are outpacing China (for this phase in the epidemic). Energy: The Brent futures curve is deep in contango. …
