Greetings, United States: Consumer sentiment edged up this month, with the U. Michigan index topping forecasts. Expectations of business conditions improved. Eurozone: The recent decline in service inflation was driven by travel-related sectors, the impact of which is likely to be transient. Europe: European banks’ underperformance has accelerated (nearly 30% year-to-date). …
Continue reading “The Daily Shot Brief – September 21st, 2020”
Greetings, United States: Mortgage lenders continue to kick the can down the road by extending loan forbearance. United Kingdom: The Bank of England is contemplating negative rates. The market has been anticipating negative rates for some time and is now convinced that the central bank will get there. The overnight rate trajectory …
Continue reading “The Daily Shot Brief – September 18th, 2020”
Greetings, United States: The FOMC now expects rates to stay near zero through 2023. Here is the dot plot. Even without the changes to inflation targeting, historical data suggest that the next rate hike is a long way off. Eurozone: The euro is weaker after the Fed’s decision. China: The renminbi also …
Continue reading “The Daily Shot Brief – September 17th, 2020”
Greetings, United States: Credit and debit card spending in Pacific states is lagging the rest of the country. United Kingdom: Here is a quote from Macrobond on the UK’s trade with the EU. … we can see that Germany was the UK’s biggest trading partner in terms of service exports, while France was …
Continue reading “The Daily Shot Brief – September 16th, 2020”
Greetings, United States: Analysts are starting to have doubts about a CARES 2 stimulus package this year. Here are the aggregate probabilities from superforecasters. The concern is that cutting off the stimulus checks could reverse the recent economic gains. At this point, the recovery is already slowing, making it vulnerable to a shock. …
Continue reading “The Daily Shot Brief – September 15th, 2020”
Greetings, United States: The US fiscal 2020 budget gap hit $3 trillion. The trajectory going forward will depend on whether we see a CARES 2 package. The good news is that the government’s interest burden is expected to decline over the next few years, helped by extraordinarily low Treasury yields. China: Bond yields …
Continue reading “The Daily Shot Brief – September 14th, 2020”
Greetings, United States: The latest weakness in the US dollar has been good for smaller US manufacturers by helping them compete on price. Smaller industrial firms have outperformed (the equal-weight stock index below gives smaller industrial firms more weight). Since we are on the topic of currencies, the dollar-yen volatility market is pricing …
Continue reading “The Daily Shot Brief – September 11th, 2020”
Greetings, United States: The Indeed job postings indicator is still 19% below last year’s level. This scatterplot shows employment recovery vs. peak-to-trough employment loss by state. According to Deutsche Bank, more than half of those on temporary layoff have been unemployed for 15 weeks or longer. Many of these temporary layoffs will be “converted” …
Continue reading “The Daily Shot Brief – September 10th, 2020”
Greetings, United States: Morgan Stanley expects Congress to pass a $1.5-2.0 trillion “CARES 2” stimulus package in September. The result will be a substantial boost to consumption (chart below) and GDP growth. All this additional liquidity is likely to give another boost to the stock market. It will also have a positive …
Continue reading “The Daily Shot Brief – September 9th, 2020”
Greetings, United States: There has been a substantial increase in households that “sometimes or often” go hungry. Many can’t cover basic expenses. United Kingdom: The pound has been under pressure as Brexit concerns resurface. Commodities: Industrial commodities buyer activity has accelerated in August. Energy: The Saudis cut oil …
Continue reading “The Daily Shot Brief – September 8th, 2020”
