Greetings,

Fist of all, we would like to welcome all the new Daily Shot readers from the Republic of Chile.

Today we begin with China where we see more evidence of stimulus kicking in. As an example, iron ore prices have risen again on renewed demand from China. Note that iron ore prices are still a fraction of the peak levels, but the bounce seems to be real.

Source: barchart

Source: The Australian

China freight volumes have bottomed and demand for cement has picked up.

Source:  ‏@swaptions 

Below is the average China cement price change over the past 3 months.

Source:  SunSirs

We also see a rebound in China's housing prices, especially in tier-1 cities (chart below shows month-over-month price change).

Source: Goldman Sachs

Here are other China-related developments.

1. US financial conditions tightened sharply following the two recent periods of renminbi weakening. Clearly the possibility of a more severe devaluation remains a concern.

Source: Goldman Sachs

2. Recently the RMB fixings have been (somewhat) linked to the broad US dollar index. This suggests that another rally in the dollar could quickly result in lower RMB fixings with financial conditions immediately tightening. This is an important factor for the Fed to consider.

Source: Goldman Sachs

3. Boosted by all the demand from wealth management products, China's corporate bond market has been growing rapidly as yields compressed. Except this year, some half a dozen bonds defaulted, and investors are getting nervous. Corporate bonds spreads have risen and issuance fell.

Source: @markets 

A recent commodities relationship that appears "out-of-whack" today may be the oil/gold ratio. The chart below tracks the ratio of the price of gold per ounce over the price of oil per barrel. It tells you how many barrels of oil you can buy with one ounce of gold. 

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Switching to Japan, we've had quite a bounce in Japanese shares as dollar-yen recovers. This suggests that the deadly earthquake played only a limited role in Monday's selloff. 

 

Source: barchart

Separately, as a proportion of the GDP, the BoJ's QE program really stands out.

Source: Goldman Sachs

Returning to Australia, Macquarie sees more RBA rate cuts, especially if global easing pushes AUD higher. Note that this contradicts yesterday's chart from Deutsche Bank.

Source: Macquarie

Source:  barchart

Indeed, the RBA minutes show the central bank concerned about rising AUD.

Source: RBA

Now on to Brazil, where we had this headline on Monday.

Source: NY Times

 Below is a summary on the political situation from Natixis - which is not very encouraging.

Source: Natixis

Indeed, the new president may not be able to put the reforms in place that are necessary to stabilize the runaway government debt.

Source:  ‏@IIF, h/t Jake

Once again, in spite of the severe headwinds Brazil is facing, it's impressive that the legislative branch was able to exercise such powers.

India's trade deficit is the lowest since 2011. However, this is driven by a decline in imports growth, while exports growth is still negative.

Now we have a couple of charts from the Eurozone.

1. This is French 1yr government bill auction rate as "interest expense" becomes a revenue source.

Source: Investing.com

2. While the Eurosystem (ECB) balance sheet is still below the peak, the Eurozone monetary base is at record levels.

Source:  ECB

Related to the above, here is the total notional of bonds with negative yield (globally).

Source: JPMorgan

Next is Morgan Stanley's projection of select central banks' policy rates.

Source: Morgan Stanley

Back in the United States, we see the ANZ Bank US GDP tracker showing results that are consistent with the Atlanta Fed's GDPNow. In the first quarter, these indicators suggest that the US grew slower than the Eurozone. 

Source: ANZ

Source: Atlanta Fed

Things are looking up for the second quarter however as the ECRI US index of leading indicators continues to rise. 

Source: ECRI

Next we have a few updates on the credit markets.

1. After a couple of scary months, Morgan Stanley institutional clients are easing up on financials CDS protection.

Source: Morgan Stanley

2. The CCC HY index is recovering although still lags the better quality HY names, as risk aversion persists.

Source:  ‏@MktOutperform 

3. Below are the cumulative flows into global ETFs since Jan-2015. 

Source: JPMorgan

In the equity markets, we see two diverging indicators.

1. The VIX index is approaching the lows for the year.

Source: barchart

2. On the other hand, macro hedge funds remain defensive (net flat equities).

Source: Credit Suisse

Next, we have a few updates on commodities.

1. Traders are pricing in cuts in sugar output estimates, sending sugar futures sharply higher.

Source: barchart

2. The recent lumber futures rally fades.

Source: barchart

3. Related to the comment on iron ore earlier, Rio Tinto cut its 2017 iron ore guidance. 

Source: Reuters

4. Speculative accounts net long gold position is the highest since 2011. 

Here is a quick comment on the Doha meeting. The Saudis are not willing to sacrifice their oil market share to Iran.

Source: Capital Economics

Iran, however, is trying to grab market share by offering Asian customers a discount to Saudi crude. More price wars?

Source: ‏@vexmark, @Bfly

Finally, here is a comparison of value creation by company founders vs. hired CEOs.

‏Source: @PitchBook

Turning to Food for Thought, we have 5 items this morning:

1. The fastest shrinking cities in the US.

Source: @StatistaCharts, h/t Jake

2. The number of deaths from air pollution (per million, by country).

Source: ‏‏@paul1kirby, @OECD

3.  The gap in employment between white and African American men remains highly elevated.

Source:‏ @SoberLook

4. There is something wrong with this distribution of test scores in the New York City public school system.

Source:  ‏@wsj

5. Some US political humor ...

Source:‏ ‏‏@NickatFP