Greetings, Equities: Here is the MSCI World Index performance after major epidemics. Credit: The chart below shows the annual default counts and defaulted debt volumes over time. Issuer-weighted default rates increased in 2019, led by energy and retail. Energy: Fitch Solutions now expects an even faster pace of adoption of alternative …
Continue reading “The Daily Shot Brief – February 5th, 2020”
Greetings, The Eurozone: German banks are holding record amounts of physical cash. China: The government is expected to continue providing substantial fiscal stimulus to the economy in 2020. Commodities: ETFs’ holdings of gold hit another record high. Energy: The front of the Brent curve shifted into contango (positive-sloping) amid demand concerns. …
Continue reading “The Daily Shot Brief – February 4th, 2020”
Greetings, China: The nation’s central bank (PBoC) injected a huge amount of liquidity into the financial system as the markets reopened after the Lunar New Year holidays. The PBoC wanted to make sure there is ample liquidity for banks to keep rolling their liabilities (cash borrowed before the holidays). The United Kingdom: Foreigners …
Continue reading “The Daily Shot Brief – February 3rd, 2020”
Greetings, The United States: Mortgage rates are near the recent lows again, … … and online search activity for home finance is at multi-year highs. The United Kingdom: Some economists think that part of the reason for the unusually low UK productivity is fewer young Britons changing jobs. The Economist: – Youngsters’ …
Continue reading “The Daily Shot Brief – January 31st, 2020”
Greetings, The United States: As widely expected, the FOMC left the fed funds target unchanged. The wording in the FOMC statement was changed from “inflation near” to “inflation returning” to the Committee’s target. In his press conference, Fed Chair Powell said that the change was meant to send “a clearer signal” that the FOMC …
Continue reading “The Daily Shot Brief – January 30th, 2020”
Greetings, Global Developments: Let’s begin with some updates on the coronavirus. Here is the Google search frequency for the word “coronavirus”: Preparedness for epidemic/pandemic: China: Here is the distribution of China’s shadow-banking credit. Eurozone: The ECB and other economists have been downgrading the euro-area inflation forecasts (PM = Pantheon Macroeconomics). United States: …
Continue reading “The Daily Shot Brief – January 29th, 2020”
Greetings, Commodities: According to the BofAML FMS monthly survey, global fund managers started the year overweight commodities (highest in eight years). Based on the charts above, these positions didn’t work out well. Nonetheless, once the coronavirus scare eases, we may see a rebound in some commodity markets. Equities: The VIX curve inverted on …
Continue reading “The Daily Shot Brief – January 28th, 2020”
Greetings, China: The Wuhan coronavirus continues to spread, with quarantines appearing to be much less effective than some had hoped (see story). While China’s markets are closed, stock futures are down over 5% today. And the offshore renminbi dropped sharply as well. Eurozone: At the Eurozone level, manufacturing activity appears to be stabilizing …
Continue reading “The Daily Shot Brief – January 27th, 2020”
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”
