A Closer Look at PPI, Fresh Records Moving Into Earnings Season, and China Huarong’s Bond Rout Deepens
April 14, 2021 | FIRESIDE CHARTS
The U.S. saw a substantially higher PPI reading than expected for March—when the index saw its second highest year-over-year gain on record—driven largely by chemical and lumbar prices. Though this climb did make its way through to consumer prices (CPI), Core CPI remains relatively benign, and both the White House and the Fed have said they expect numbers to moderate after a temporary acceleration. Corporate pensions are approaching fully funded status (~97%) in the U.S. after a record bull run. However, the record federal deficit and insolvency risk remain as points of concern for both the equity and fixed income markets. Though the S&P 500® Index didn’t appear concerned moving into earnings season… And Bitcoin may have climbed above $63,000 to hit a record high ahead Coinbases’s direct listing this week, but the ascent hasn’t been without some significant drawdowns along the way. Meanwhile, China’s bond rout has deepened as onshore debt defaults climb to fresh records.
1. Some follow-up statistics on the magnitude of some of the input prices increasing PPI:
Source: The Daily Shot, from 4/13/21
2. The global stock and bond rally of the last ten years has helped fund corporate pensions. Too bad government pensions (local, state & federal) have not followed suit…
Source: Morgan Stanley, from 4/14/21
3. How long can these government operating deficit levels go before the markets react?
Source: The Daily Shot, from 4/13/21
4. Are the credit markets out of the woods yet?
Source: The Daily Shot, from 4/13/21
5. The S&P 500 has had a strong rally going into earnings season. Will the reported earnings measure up?
Source: The Daily Shot, from 4/14/21
6. A word of caution to those buying crypto at these levels: The drawdowns have been three times higher than gold with two at ~80%!
Source: The Daily Shot, from 4/13/21
7. The markets are expecting one or more Chinese state-owned enterprises to default:
Source: The Daily Shot, from 4/14/21
8. …Which is not unreasonable given what has been happening:
Source: The Daily Shot, from 4/14/21
9. The Fed’s Bullard suggested that at a 75% vaccination level, The QE taper could begin. What if we don’t reach the 75% level? If we do, will the markets react similarly to the last “Taper Tantrum”?
Source: The Daily Shot, from 4/13/21
10. Will the Olympics, scheduled for July, turn into a super-spreader event? Most emerging economies have similar inoculation rates as Japan…
Source: The Daily Shot, from 4/14/21
11. An interesting breakdown:
Source: Statista, from 4/14/21
12. Our infrastructure plan should include new projects that spur growth as well as repair. Here is what China has done with high-speed rail:
Source: The Daily Shot, from 4/14/21
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.