Greetings, United States: Next, we have some updates on inflation. Based on economic data, there is plenty of slack in the US economy. As a result, inflation should moderate. However, when production capacity and labor utilization are constrained by supply instead of demand, one should recalibrate the measures of slack. Wage growth is likely …
Continue reading “The Daily Shot Brief – October 25th, 2021”
Greetings, China: Long-term correlation between China’s government bonds and Treasuries has been climbing since the financial crisis. Eurozone: What are the polls and the betting markets telling us about the French presidential election? United States: Options markets are pricing in a higher probability of inflation exceeding 3% over a longer period. …
Continue reading “The Daily Shot Brief – October 22nd, 2021”
Greetings, United States: Here are some updates on inflation. TIPS breakevens (market-based inflation expectations) keep climbing, with the 5-year rate hitting a multi-year high. The amount of “excess” liquidity in the economy is staggering, which will continue to be a tailwind for inflation. Here is the M2 money supply vs. the pre-COVID trend. …
Continue reading “The Daily Shot Brief – October 21st, 2021”
Greetings, United States: Residential construction eased in September, with single-family housing starts and construction permits dipping below last year’s levels. Europe: Which countries are most dependent on Russian natural gas? China: Beijing is trying once again to curb coal prices. Part of the problem is the disconnect between coal and electricity …
Continue reading “The Daily Shot Brief – October 20th, 2021”
Greetings, United States: Here are the reasons for the lack of urgency in returning to work. Canada: Four BoC rate hikes by the end of Q3 of next year? The market is convinced. Eurozone: Economists are boosting inflation forecasts. The CPI – PPI spread has blown out, which could squeeze corporate profit …
Continue reading “The Daily Shot Brief – October 19th, 2021”
Greetings, United States: Global inflationary trends (combined with robust US consumption) are causing the market to reevaluate the Fed’s actions over the next few years. The market is increasingly convinced that the Fed will be forced to hike twice next year. Moreover, the market sees the central bank becoming more aggressive over the next …
Continue reading “The Daily Shot Brief – October 18th, 2021”
Greetings, United States: Is the US facing stagflation? Not quite. But “slowflation” is a possibility. Eurozone: The recent rise in Eurozone inflation was largely due to the rebound in energy prices. Asia-Pacific: Covid cases in Australia are surging. Energy: Brent crude is trading near $85/bbl. US gasoline futures are approaching $2.50/gal …
Continue reading “The Daily Shot Brief – October 15th, 2021”
Greetings, United States: The Department of Energy estimates that heating costs for households will be 30% higher this winter. Eurozone: Industrial production dipped in August. Emerging Markets: The Turkish lira continues to sink as Erdogan crushes the central bank Cryptocurrency: Bitcoin continues to outperform. Equities: Global earnings downgrades are about …
Continue reading “The Daily Shot Brief – October 14th, 2021”
Greetings, United States: A record share of businesses are boosting wages and plan to keep doing so in the months ahead. The cost of labor is becoming more of a problem. Canada: The market is now certain that the BoC will hike rates on or before April. China: The blowout in bond …
Continue reading “The Daily Shot Brief – October 13th, 2021”
Greetings, China: Thermal coal prices hit a new high today amid falling inventories and strong demand for electricity. Asia-Pacific: Australia dominates the global iron ore supply. Slowing demand from China does not help. Japan: Producer prices increased more than expected last month. With consumer inflation remaining depressed, the PPI spike could put …
Continue reading “The Daily Shot Brief – October 12th, 2021”
