Greetings, United States: CPI volatility is low relative to asset price volatility. According to Morgan Stanley, dovish Fed policy chasing higher inflation is more likely to result in higher asset price inflation before we get to higher consumer inflation. And that could pose a risk to financial stability. China: Although local state-owned enterprises (SOEs) are …
Continue reading “The Daily Shot Brief – January 24th, 2020”
Greetings, United States: Let’s begin with the housing market. Mortgage applications for home purchase remain at multi-year highs. United Kingdom: Traders are increasingly upbeat on the British pound. Here is the 3-month risk reversal. Eurozone: The French 10yr bond yield is back in negative territory as the yield curve flattens. China: …
Continue reading “The Daily Shot Brief – January 23rd, 2020”
Greetings, United States: The growth in revolving consumer credit is falling behind the increase in wages. According to TS Lombard, this indicator typically spikes heading into a recession or periods of perceived economic stress. China: The renminbi declined for the second day (chart below), and China’s stock market slumped (second chart) on worries …
Continue reading “The Daily Shot Brief – January 22nd, 2020”
Greetings, China: Analysts have been extremely bullish on China’s stocks recently. Asia-Pacific: Asian currencies are weaker in response to the Wuhan virus news as sentiment switches to risk-off. Europe: 79% of EU’s coal is produced at a loss. The United States: The Fed’s ability to influence the nation’s business activity has …
Continue reading “The Daily Shot Brief – January 21st, 2020”
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”
