The Daily Shot And Data - September 1, 2016
Greetings,
Please note that the next Daily Shot will come out on Tuesday, September 6th.
1. We begin with emerging markets where Nigeria has finally released its Q2 economic figures. Some suggest that the delay was related to John Kerry's visit. Perhaps. Here is the quarterly GDP.
Nigeria's employment situation has worsened as payrolls fell while the unemployment rate rose.
Nigeria's foreign reserves continue to deteriorate.
Moreover, the nation's food inflation is accelerating due to weak currency.
Domestic bond yields are rising again on the back of the above reports.
Source: Investing.com
2. Other oil producing nations are experiencing significant economic deterioration as well. Here is Saudi Arabia's GDP - note the non-oil component.
Source: Capital Economics, @elenaholodny (Business Insider)
3. South Africa's sovereign CDS spread is grinding higher.
It looks as though South Africa's private sector is experiencing a credit crunch of sorts. Credit as well as the broad money supply growth slowed more than expected.
4. The Ukrainian central bank says that the pressure on the hryvnia is seasonal and it has sufficient reserves to defend it if need be. Perhaps. FX forward traders are betting on further declines in the nation's currency (chart below shows the 1-month forwards).
5. Argentina's economic situation continues to deteriorate. Here is the industrial production as well as construction activity.
6. Dilma Rousseff's impeachment removes a layer of economic uncertainty for Brazil.
Source: BBC
That's important because Michel Temer has a great deal of "wood to chop". Brazil just had its 6th consecutive quarter of declining GDP while the debt/GDP ratio continues to grow. The nation's economy should begin healing in the next few months.
7. Chile's unemployment rate is grinding higher.
The Chilean peso remains under pressure.
Source: myfxbook.com
8. South Korea's manufacturing sector is back in contraction mode (PMI < 50).
Separately, South Korea's core consumer inflation hit the lowest level in years. Dis-inflationary pressures persist across some economies in Asia.
9. China's state and private manufacturing PMI indices diverge. The quote below is from Markit Economics, whose index shows China's manufacturing growth stalling.
Source: @fastFT
Source: Markit Economics
Switching to Japan, the nation's Capex is slowing again.
Moreover, Japan's corporate profits remain in the red.
Australia's retail sales surprised to the down-side.
Furthermore, the nation's manufacturing activity suddenly moved into contraction mode.
UK's home price growth exceeded expectations with no visible signs of Brexit-related pressures thus far. Some analysts suggest that it will take time for the weakness in the nation's housing to show up. Perhaps.
1. Next, we go to the Eurozone where the core CPI unexpectedly declined. Once again, this is a setback for the ECB.
2. The Eurozone's unemployment rate is stubbornly stuck above 10%. Labor reform in a number of nations may be the only sure way to take this figure significantly lower.
3. German retail sales jumped more than expected. This is a small step toward addressing the massive imbalances in the Eurozone (Germany needs to increase domestic consumption).
4. The French consumption growth, on the other hand, declined sharply.
5. Portugal surprised with stronger-than-expected growth and improved forecasts. The economy has been expanding for nine consecutive quarters.
6. Italy seems to have exited deflation for now.
However, dis-inflationary pressures in Italy persists as wage growth collapses.
7. Spain's government bond yields jumped on the upcoming parliamentary vote (see the explanation below from the FT).
Source: @fastFT
European bank shares continue to recover from the massive losses that immediately followed the EU Referendum in the UK.
The global reach for yield continues to push the bank CoCo market higher. These securities came under pressure early in the year driven by all the uncertainty around Deutsche Bank. By the way, rumors persist that the German authorities want Deutsche Bank to find a merger partner/buyer. Apparently, the discussions with Commerzbank didn't go anywhere. See this for further reading.
Canada's GDP contracted sharply, although the decline was largely expected. At least some of the decline was driven by a significant contraction in non-oil exports.
1. Back in the United States, pending home sales rose 1.3% in July but don't look so hot on a year-over-year basis.
Source: Bloomberg LP
2. The ADP private payrolls report showed that the drag from manufacturing and construction that we saw over the past couple of months is no longer there. If this translates into a similarly decent non-farm jobs report on Friday, a rate hike this year looks increasingly likely.
Source: ADP
3. Fed's Kashkari wants to focus on the huge differential between white and African American unemployment rates.
Source: MarketWatch
1. We now turn to the energy markets where both oil and gasoline inventories (from the Department of Energy) were higher than expected.
2. Crude oil fell sharply in response to the DOE report - pressuring the equity markets on the way down.
3. US oil imports continue to rise, materially widening the gap with last year's levels.
4. On the other hand, US crude oil production resumed its declines.
In other commodity markets, the broad index continues to fall.
A few commodities are bucking the trend - with lead being one of them. Supposedly this has to do with auto battery demand in China. Perhaps.
Turning to Food for Thought, we have 5 items today:
1. According to the Kaiser Foundation, "many people on Medicare have chronic health problems and live on modest incomes".
Source: @KaiserFamFound
2. Apprehensions of Mexican migrants at US borders have been declining. Mexico, on the other hand, is struggling with the inflow of migrants from Central America.
Source: @pewresearch
Source: @pewresearch
3. A small majority in the US now supports labor unions. The second chart below shows the breakdown of support by political affiliation.
Source: @GallupNews
Source: @GallupNews
4. Which countries have the highest proportion of older workers?
Source: @paul1kirby, @OECD
5. According to RentCafe here is "how much space $1,500 gets you in the 100 most populous US cities" (a relative comparison).
Source: @paul1kirby, Rent Cafe Blog
Once again, the next Daily Shot will be out on Tuesday, September 6th. Have a great weekend (and Labor Day for those in the US)!
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