Greetings, United States: The US Census Bureau showed housing starts rising sharply in December. We haven’t seen an increase like this in years. United Kingdom: Gilt yields have been declining since the start of the year. Eurozone: Germany’s debt-to-GDP ratio fell below 60% for the first time in years. China: This …
Continue reading “The Daily Shot Brief – January 20th, 2020”
Greetings, China: Analysts remain concerned about China’s rising nonperforming loans (NPLs). The chart below shows that rural banks have the highest non-performing loan (NPL) ratio. And NPLs for city-based banks increased substantially over the past two years. Eurozone: According to UBS, only a handful of European countries (Germany, Netherlands, Finland) will have a low enough …
Continue reading “The Daily Shot Brief – January 17th, 2020”
Greetings, The United States: The January manufacturing report from the NY Fed (Empire Manufacturing) showed some hopeful signs. The Empire State index improvement bodes well for manufacturing activity at the national level (ISM). The United Kingdom: The market-based probability of a BoE rate cut this month climbed further in response to the CPI …
Continue reading “The Daily Shot Brief – January 16th, 2020”
Greetings, The United States: According to Steven Mnuchin, troubles at Boeing will shave off 0.5% from the 2020 GDP growth. While the Boeing situation is indeed troubling (charts below), it is highly unlikely that the company will have that much of an impact on the economy. But it does create a convenient explanation for …
Continue reading “The Daily Shot Brief – January 15th, 2020”
Greetings, Equities: The S&P 500 is becoming increasingly concentrated. The market capitalization share of the top five companies is at multi-decade highs. At the same time, these top firms’ percentage of net income is lagging the gains in market value. Share buyback activity, which bolstered performance over the past couple of years, has …
Continue reading “The Daily Shot Brief – January 14th, 2020”
Greetings, United States: Let’s begin with the December employment report, which was weaker than the markets were expecting. This chart shows the changes in employment by sector in 2019. United Kingdom: The economic impact of Brexit-related uncertainty has been substantial. Asia Pacific: According to BCA Research, Chinese and Korean government bond yields …
Continue reading “The Daily Shot Brief – January 13th, 2020”
Greetings, Equities: Downside protection in the S&P 500 is near recent lows, indicating rising investor confidence Credit: Investors are piling into investment-grade bond funds. Emerging Markets: Argentina’s central bank has accelerated money “printing” since the elections. Eurozone: Pantheon Macroeconomics expects the ECB to play it safe in the first half of …
Continue reading “The Daily Shot Brief – January 10th, 2020”
Greetings, Europe: The EU is running a trade surplus with itself. This anomaly may be caused by value-added tax fraud of more than €60 billion. Asia-Pacific: Sentiment among large Japanese electronics retailers has soured. Will they begin to cut prices? China: As China relies more on consumption-driven growth, the decline in disposable …
Greetings, Commodities: Farmers are concerned that hostilities in the Middle East could curtail US wheat exports to the region. Credit: US auto loan and credit card delinquencies have been trending higher. Emerging Markets: Growth in the UAE’s business activity stalled even before the ratcheting of Middle East tensions. Japan: Here are …
Greetings, The United States: Turning to manufacturing, the ISM and Markit PMI measures have diverged further. Part of the difference is the ISM indicator’s higher correlation to factory activity in the Midwest, which experienced significant deterioration in recent months (see chart). Will a rebound in manufacturing in 2020 provide a tailwind for economic …
