Daily Archives: September 20, 2020

U.S. Economy

Tuesday (September 22nd)

Existing Home Sales for August – Bloomberg consensus: 6.01m(e) v 5.86m prior
Another increase in Existing Home Sales would be coherent with the bounce in Pending Home Sales. As the National Association of Realtors (NAR) noted, “The Pending Home Sales Index (PHS), a leading indicator of housing activity, measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. Because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing-Home Sales by a month or two.” In this context, It would be coherent if EHS finally catch up with PHS as suggested by the chart below. See my complete preview here.

 

Friday (September 25th)

Durable Goods Orders for August – Bloomberg consensus MoM: +1.1%(e) v +1.4%
Boeing says it booked eight new orders in August, including five for its beleaguered 737 Max. However, it had 20 cancellations during the same month, including 17 737 Max (implying a figure of -12❗ for net orders). It is the seventh month in a row that cancellations outpaced new orders.




 

On Tuesday, the National Association of Realtors (NAR) will release the Existing Home Sales (EHS) report for August. According to the Bloomberg consensus, EHS should increase by 2.6% MoM to 6.01M SAAR.

→ My proxies confirm that EHS should be close to 6.0M in August, which would be the highest since December 2006.
→ Local/state data and different reports also point to a jump of median home sales price amid a continued decline in inventory.


 

1. Buyers benefited from favorable market conditions

Fundamentals improved with a sharp decline of mortgage rates. According to Freddie Mac, the average for a 30-year fixed-rate loan remained below 2.90%, which is close to the lowest level on record. In this context, Freddie Chief Economist highlighted that “Despite the recession, low rates have spurred first-time homebuyer activity, up 19% in August from July.

The avg. 30-Yr FRM holds at 2.87% https://t.co/Cj2GH9Tofy

Chief Economist @TheSamKhater: “Despite the recession, low rates have spurred first-time homebuyer activity, up 19% in August from July. This rebound in the housing market comes at a critical time for the economy.” pic.twitter.com/ThZSowKoOx

— Freddie Mac (@FreddieMac) September 17, 2020

 

2. Another increase in Existing Home Sales would be coherent with the bounce in Pending Home Sales

As the National Association of Realtors (NAR) noted, “The Pending Home Sales Index (PHS), a leading indicator of housing activity, measures housing contract activity, and is based on signed real estate contracts for existing single-family homes, condos, and co-ops. Because a home goes under contract a month or two before it is sold, the Pending Home Sales Index generally leads Existing-Home Sales by a month or two.” In this context, It would be coherent if EHS finally catch up with PHS as suggested by the chart below.

 

3. Local/state reports confirm that sales kept rising on a YoY basis in August

Local/state figures suggest that national existing home sales (non-seasonally adjusted: NSA) are likely to have risen on a YoY basis in August (second straight increase). There is anecdotical evidence that many households chose to relocate due to coronavirus pandemic with some of them prefering suburbs. Using my sample of local/state data and a seasonal adjustment factor lower than last year (more favorable due to fewer business days), I expect August EHS to increase by ~2.0% (seasonally adjusted: SA).

 

4. Median home sales price jumped amid a drop in inventory

The latest Redfin report underlined that “The national median home price rose 11% year over year to $328,400 in August—the largest annual increase since February 2014“. In the meantime, “Active listings—the count of all homes that were for sale at any time during the month—fell 22.0% year over year to their lowest level on record in August, the 12th-straight month of declines.” Meanwhile, Adam Contos, CEO of RE/MAX Holdings also highlighted that “The demand for houses is easily eclipsing the available inventory in metro areas across the country. Buyers are moving forward in record numbers, unfazed by inventory challenges and consistently higher prices.

 

For our full analysis of the August housing market, read our latest report https://t.co/5SkLuhpCys

— Redfin (@Redfin) September 17, 2020

Home sales in August were sizzling !

Check out the RE/MAX National Housing Report for August here:https://t.co/0zADYdlot0 pic.twitter.com/OjXHumqWoI

— RE/MAX (@remax) September 17, 2020

Europe

According to the European Centre for Disease Prevention and Control, 26 European countries (v 25 prior) have crossed a key threshold of new coronavirus infections. Latest data showed that the countries have recorded cumulative 14-day infection totals higher than 20 per 100,000 inhabitants, considered an early alarm level by many health experts.


Source: European Centre for Disease Prevention and Control (data as of Sep. 19th)

 

Germany

#Germany's confirmed #coronavirus cases rise by 1,345 on Sun. (v 2,297 prior and 948 last Sun.) – RKI
*Link: https://t.co/LoHFnnUCU0 pic.twitter.com/9xAVfWMNox

— Christophe Barraud (@C_Barraud) September 20, 2020

 

Spain

Pacientes COVID UCI en España por cada 100.000 habitantes pic.twitter.com/mNdJEca9PU

— Miguel Ángel Reinoso (@mianrey) September 19, 2020

#Spain | #Madrid orders 850,000 people in capital to stay in own areas – FThttps://t.co/hWXLBBiEzD

— Christophe Barraud (@C_Barraud) September 19, 2020

 

France

#FRANCE REPORTS 13,498 NEW #CORONAVIRUS CASES IN PAST 24 HOURS (V 13,215 PRIOR AND 10,561 LAST SAT.)
*Positivity Rate: 5.6%❗ (v 5.4% prior).
*Santé Publique France: https://t.co/bZLT3Rguuz pic.twitter.com/zX3qTZdHSp

— Christophe Barraud (@C_Barraud) September 19, 2020

Mise à jour avec les données du 19/09 (16/09 pour les tests) : https://t.co/oGJiH6e9rU

⚠️237 hospi et 76 décès ont été remontés le 18/09 dans le 91 alors qu'ils datent d'avant la S29, ces données sont ignorées pour éviter de perturber les tendances des derniers jours. pic.twitter.com/YP8OKWJwv0

— Germain Forestier (@gforestier) September 19, 2020

Mise à jour avec les données du jour pour les tests (16/09). ⚠️Seules les données des 14-15-16/09 sont disponibles pour la S38 (cette semaine). Suivre l'évolution avec les données disponibles dans les prochains jours : https://t.co/oGJiH6e9rU pic.twitter.com/rRrG2nG0TU

— Germain Forestier (@gforestier) September 19, 2020

[THREAD]#MétéoCovidFrance du 19 septembre

Hospitalisations

France Métropolitaine :
441 entrées ⬆️ J-7 (226)
Moyenne 490,71 ⬆️ J-1 (460,00)

DOM :
29 entrées ⬆️ J-7 (17)
Moyenne 25,86 ⬆️ J-1 (24,14)

Graph sur toute la période et les 120 derniers jours

La suite ⤵️ pic.twitter.com/3W9PFdCNKv

— Guillaume Saint-Quentin (@starjoin) September 19, 2020

 

Italy

#ITALY REPORTS 1,638 VIRUS CASES FRI. (VS 1,907 FRI. AND 1,501 LAST SAT.)
*Link: https://t.co/FWQszjNVxD pic.twitter.com/QNuZ7girUO

— Christophe Barraud (@C_Barraud) September 19, 2020

In Italia 1.638 nuovi casi e 24 morti. Oltre 103 mila i tamponi https://t.co/1krWVgM0tP

— Corriere della Sera (@Corriere) September 19, 2020


 

Daily New Confirmed Cases (7-day moving average)


*Note: Data can’t be directly compared to lockdown period amid methodology change and increasing frequency of tests (see below).

 

Daily New Tests (7-day moving average)

 

Positivity Rates (7-day moving average)

 

Daily New Confirmed Deaths (7-day moving average)

Just to keep things into perspective: Combined balance sheet of Fed, BoJ and ECB has hit to fresh ATH at $21.3tn, equal to US GDP, meaning that paper money continues to be devalued, which may not be reflected in consumer prices, but in asset prices. pic.twitter.com/0kGfl00Nyx

— Holger Zschaepitz (@Schuldensuehner) September 20, 2020

Analysis from new @BIS_org paper concludes that actions by @federalreserve during #COVID19 crisis have accounted for ~1/2 of S&P 500’s rebound & ~1/5 of EURO STOXX 50’s rebound @Bloomberg @ecb pic.twitter.com/XA9hBYfpIo

— Liz Ann Sonders (@LizAnnSonders) September 18, 2020

6. (as such) Surge in #IPO filings reflects a scramble to get a piece of the action…#makehaywhilethesunshines pic.twitter.com/ukm9tT4kx4

— Callum Thomas (@Callum_Thomas) September 19, 2020

‘The estimated 12-year total return for a conventional passive portfolio mix has declined to -0.95%, easily the lowest level in history, including the extreme low associated with the 1929 market peak.’ https://t.co/UmpcPb1jKW pic.twitter.com/umWZJdzoAK

— Jesse Felder (@jessefelder) September 19, 2020

Talking about concentration risk! #China’s weight in the MSCI Emerging Markets Index has risen to above 40%. ht @SoberLook pic.twitter.com/vE8Lc0jfht

— jeroen blokland (@jsblokland) September 19, 2020

Americas

Daily coronavirus thread: The US reported its smallest rise in deaths in three days, the WHO made a last push for countries to join its vaccine effort and England will impose tough new restrictions on Friday. Follow our live coverage: https://t.co/TphvMVi7C6

— Financial Times (@FinancialTimes) September 18, 2020

Companies Brace for Higher Taxes After U.S. Election – WSJhttps://t.co/RUgijsOMcE

— Christophe Barraud (@C_Barraud) September 19, 2020

Big investors who own shares in and trade with the largest banks should push lenders to reduce risks by increasing capital levels, Minneapolis Fed President Neel Kashkari says https://t.co/E7CMI27wkz

— Bloomberg Economics (@economics) September 19, 2020

#Trump Wants $5 Billion From #TikTok Deal for History Project – Bloomberghttps://t.co/vB0dYLE3eK

— Christophe Barraud (@C_Barraud) September 20, 2020

U.S. will delay TikTok U.S. app store ban by one week https://t.co/ZKHqJDWk6c pic.twitter.com/dwhxrAynXu

— Reuters Business (@ReutersBiz) September 20, 2020

AstraZeneca says #COVID_19 vaccine trial in U.S still on hold – Reutershttps://t.co/Zq7h04SOhK

— Christophe Barraud (@C_Barraud) September 20, 2020

 

Asia

#China's economy remains resilient despite external risks, says Xi – Reutershttps://t.co/DjGMZNUVQq

— Christophe Barraud (@C_Barraud) September 20, 2020

China dismissed accusations of targeting U.S. firms as it seeks to punish foreign companies that damage its national security by adding them to a “unreliable entity list” https://t.co/UhRDtyUwWw

— Bloomberg Asia (@BloombergAsia) September 20, 2020

#China does not have a timetable for 'unreliable entities list' – Reutershttps://t.co/cfUBaBNdPn

— Christophe Barraud (@C_Barraud) September 20, 2020

Japan Minister for Digital Transformation Takuya Hirai plans to launch the administration’s promised Digital Agency next year to improve the efficiency of government services https://t.co/yRCT7tcyOu

— Bloomberg Asia (@BloombergAsia) September 20, 2020

Foreign ministers of Japan, US, Australia and India to meet in Octoberhttps://t.co/rBd8IrIQWD

— Nikkei Asian Review (@NAR) September 19, 2020

 

Europe

#Europe #Covid_19: Daily Summary (September 20th)

*Focus on #Germany, #Spain, #France and #Italy https://t.co/O1srDbYUQO

— Christophe Barraud (@C_Barraud) September 20, 2020

Boris Johnson on second coronavirus wave: Buckle up, it's coming.https://t.co/RJlVjVYOI4

— POLITICOEurope (@POLITICOEurope) September 19, 2020

EU seeks new powers to penalise #tech giants – FThttps://t.co/5kz254PW99

— Christophe Barraud (@C_Barraud) September 20, 2020

Britain is facing mass unemployment as the government ends a program to support workers through the coronavirus pandemic (via @lucy_meakin & @_DavidGoodman) https://t.co/OZFZH9rBp6

— Bloomberg Economics (@economics) September 20, 2020

BoE's Haldane says UK recovering 'faster than anyone expected' https://t.co/mQylZSULGg pic.twitter.com/UeVhdlswyA

— Reuters Business (@ReutersBiz) September 20, 2020

Germany plans reform to avoid bankruptcy wave due to corona https://t.co/IP2dDcAFwD pic.twitter.com/nQRhFEHOyH

— Reuters Business (@ReutersBiz) September 19, 2020

World’s Central Banks Adjust to Fed Three-Year Plan: Week Ahead – Bloomberg
*Link: https://t.co/xOeUY0FOPX pic.twitter.com/8NFWTqrL8D

— Christophe Barraud (@C_Barraud) September 20, 2020

Turkey’s central bank will raise the upper bound of its interest-rate corridor when it meets on Thursday, according to Goldman Sachs https://t.co/Bfhq94TasU

— Bloomberg Asia (@BloombergAsia) September 20, 2020

Can international law enforcement agencies please open up a Chart Crimes investigation into Deutsche Bank? pic.twitter.com/2yYHglmMeM

— Joe Weisenthal (@TheStalwart) September 14, 2020

Analysis from new @BIS_org paper concludes that actions by @federalreserve during #COVID19 crisis have accounted for ~1/2 of S&P 500’s rebound & ~1/5 of EURO STOXX 50’s rebound @Bloomberg @ecb pic.twitter.com/XA9hBYfpIo

— Liz Ann Sonders (@LizAnnSonders) September 18, 2020

The market capitalization of the MSCI USA Index as a percentage of the MSCI All Country World Index reached its highest in nearly two decades earlier this month and now sits just below that at about 58% – Bloomberg pic.twitter.com/Il7DP1pFdj

— Christophe Barraud (@C_Barraud) September 16, 2020

We know forward P/E for S&P 500 is approaching dot com-era levels, but PEG ratio has also gone parabolic (4-standard deviation move) given collapse in long-term earnings growth & lack of guidance moving forward @bcaresearch @Refinitiv #IBES pic.twitter.com/S99SNDcTGN

— Liz Ann Sonders (@LizAnnSonders) September 17, 2020

6. (as such) Surge in #IPO filings reflects a scramble to get a piece of the action…#makehaywhilethesunshines pic.twitter.com/ukm9tT4kx4

— Callum Thomas (@Callum_Thomas) September 19, 2020

Wild chart…

Volume of trading in single stock options > volume of regular shares for the first time.@WSJ pic.twitter.com/VoNMXvKVOD

— Nate Geraci (@NateGeraci) September 13, 2020

Wall Street: "long US tech" is the most crowded trade of all time

Also Wall Street: we are putting all our money in tech pic.twitter.com/bNp9rrlTFY

— zerohedge (@zerohedge) September 15, 2020

The market remains highly concentrated, which historically has not worked out well. This is problematic when the Top 5 companies make up as much of the index as the bottom 390. It's also a result of "passive investing." pic.twitter.com/wdd1GkXxTq

— Lance Roberts (@LanceRoberts) September 15, 2020

Global #technology M&A highest since 2000! Chart via @Refinitiv pic.twitter.com/oFRJsf2b7Y

— jeroen blokland (@jsblokland) September 15, 2020

Any time there is even a modest pullback in the market, liquidity collapses. Thanks HFTs pic.twitter.com/VDaSysKtxc

— zerohedge (@zerohedge) September 16, 2020