Shipments/ Fed Independence/ Favorite Post/ Most Popular

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Shipments

With all this tariff talk there has started to be quite a focus on shipments to the US, or lack thereof. Hard not see a chart of container, truck, or port utilization of late.

We would like to try and put some of the pieces together the way we see them.

So far 2025 is off to a bleak start, bested only by 2020 recently. Below is domestic freight out of the LA port. Less stuff leaving the port after being dropped off.

The below chart might help explain why.

Departures from China to the US in both ship count, white line, and tonnage, magenta line.

Both down roughly 32%!

Now, it takes 30 days for containers to go from China to LA.

So, the impact of the 32% drop off has yet to be fully felt.

And that led us to wonder about business confidence and whether the lack of it will lead to less CapEx as well.

Which takes us to this chart:

We took the above to heart and wanted to see how the Cap Goods shipments Nondef Ex Air looked presently. Maybe it’s coincidental or maybe causational, but when that metric moves substantially lower, GDP definitely slows down, and with-it trailing P/E multiples.

It has not rolled over just yet, but when it does it could definitely be an issue.

Which might be exactly why some are not waiting around to see the actual event.


We hope this does not lead to more announcements like this.

Mack Trucks fires 350 workers in Pennsylvania—CEO says “President Trump’s tariffs are the driving force.” Workers will receive no severance or benefits—company exploits loophole over so called “probationary period.” Local economy will lose $260.59 Million per year—2.9% of the region’s manufacturing GDP. Mack Trucks announced the laying off of 350 workers—10% of all employees—at its Lehigh Valley Operations facility in Lower Macungie Township, Pennsylvania. This could trigger 220 indirect job losses in the local supply chain due to a 20% reduction in supplier contracts—exacerbating the economic impact on the Lehigh Valley region.

They are not alone:


Maybe the Equity market is starting to sense this. At the time of this writing the SPX is looking to have one of its better weeks, but high realized vol is not exactly the type of foundation on which to build a confident bull market.

Fed Independence

A lot of talk about the “Independence” of the Federal Reserve recently. But if one looks at a picture of GDP and Fed funds rate a little different picture emerges…

The ”Independent” Fed cut rates 100bps while the Atlanta Fed GDP Now was in the 3.5% range, presently it is 500bps+ below that and we they are in we are data dependent stage?

For good measure adding CPI which is roughly at the same level or lower than when the 100bps of cuts began. 10/31/24 reading was 2.6%, while most recent is 2.4%.

Meanwhile the GS Financial Conditions Index showing that conditions are tighter as well.

Favorite post

Self-explanatory

Most Popular


Most popular chart of the week?

What is the Zweig Breadth thrust?

Perspective

A gentle reminder of how crazy things can get:

Have a great weekend!

Best,

Meraki Trading Team

About Meraki Global Advisors

Meraki Global Advisors is a leading outsourced trading firm that eliminates investment managers’ implicit and explicit deadweight loss resulting from inefficient trading desk architectures. With locations in Park City, UT and Hong Kong, Meraki’s best-in-class traders provide conflict-free 24×6 global trading in every asset class, region, and country to hedge funds and asset managers of all sizes. Meraki Global Advisors LLC is a FINRA member and SEC Registered and Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.

For more information, visit the Meraki Global Advisors website and LinkedIn page
Contact:
Mary McAvey
VP of Business Development

The Tweet/ GDP Estimates/ VIX/ Jamie & Mark/ Next weeks earnings

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A shortened holiday week which fortunately felt a bit less volatile in the markets, but not on the news flow side. Many consequential data points, but tying a cohesive narrative through them might be a bit of a stretch.

Nonetheless, we are going to give it a shot!

RRP’s

We start with the tweet that surprised nobody but traditional media could not help but focus on.

Whether the President can actually do this is yet to be seen, please note last week we mentioned that the path for such a move may have been paved with the recent SCOTUS decision.

This chart caught our eye this week, which we will explain if you indulge us briefly.

With a little help from Google, the definition of Reverse repurchase agreements:

The most significant point above we think is at the very bottom, “if the Fed conducts fewer reverse repos, it increases the money supply, potentially leading to lower interest rates.”

The chart above shows the level activity is certainly headed in the right direction, so we wonder if Chairman Powell is in fact trying to get ahead of further tweets like the one above?

GDP

The great GDP debate continues. The battle between the Atlanta and New York Fed estimating the Q1 US GDP continues. The race ends April 30, 2025.

Presently the NY Fed is predicting the Q1 US GDP at 2.59% growth.

The Atlanta folks on the other hand see it below 0.

Regardless of which branch of the Federal reserve is correct, this is backward looking data.

We think more recent anecdotal data is piling up in favor of Atlanta.

Chinese purchases of American oil are down -90% Y/Y, while Chinese purchases of Canadian oil are up +700% Y/Y.
That’s a $20B annual loss for the United States at $60/barrel.

Home builders are beginning to show signs of cracking. DR Horton, America’s largest builder, just reported a 15% YoY contraction in sales orders. The largest contractions happened in the Southwest / Southeast, where sales dropped nearly 25%. A slowdown of this magnitude is a sign of decreasing consumer confidence and an oversupply of housing in America’s Sun Belt.


Which combined with this tweet:

Does not give one the warm and fuzzies around the residential home market.

Recent shipping metrics, obviously not included in the backward looking Q1 GDP, have been falling off the ship.

Which will have quite the future impact on the domestic trucking industry.

But, it’s not just goods, its people too!

As we have presented before, the potential for a slower economy is manifesting itself in surveys, or the so called “soft data”.

Expectations and Sentiment direct from U of M website:

https://www.sca.isr.umich.edu/charts.html

And this final chart sums it up the best, people across the earnings spectrum are simply not feeling good about the future, and that effects everyone’s’ spending habits.

Analysts are consumers as well, and we think this chart shows they sense, expect, feel it as well?

Citibank Earnings Revision Index

So, the NY Fed may be more accurate for the call April 30th, due to rear view mirror ability, but keeping one eye on the Atlanta peeps might serve investors well.

VIX

A good argument for putting $$ to work when the VIX Index goes north of 50?

We think an argument can be made that most of the data is heavily skewed to GFC and Covid, but heck the math is the math!

Jamie & Mark

Considering his age and amazing career we think it inevitable that there will be more posts like this in the future.

So, it made us wonder what his record of selling looks like.

We went through a rigorous methodical process to determine, he’s pretty good at this buying and selling stuff.


We would like to leave you with this, it’s a post from Mark Cuban. Rare to see him agree with POTUS, but for all our sake’s we hope they collaborate!

https://x.com/mcuban/status/1912628036668739778 

Here is the opening quotation:

Earnings next week:

TMT

  1. Alphabet (GOOGL) Thu, Apr 24
  2. Tesla Inc (TSLA) Tue, Apr 22
  3. T-Mobile (TMUS) Thu, Apr 24
  4. IBM (IBM) Wed, Apr 23
  5. AT&T (T) Wed, Apr 23
  6. SAP SE (SAP GR) Tue, Apr 22
  7. SK Hynix (000660 KS) Thu, Apr 24
  8. Verizon (VZ) Tue, Apr 22
  9. ServiceNow (NOW) Wed, Apr 23
  10. Texas Instrument (TXN) Wed, Apr 23
  11. Comcast (CMCSA) Thu, Apr 24
  12. Fiserv (FI) Thu, Apr 24
  13. Lam Re (LRCX) Wed, Apr 23
  14. Intel (INTC) Thu, Apr 24
  15. Charter (CHTR) Fri, Apr 25
  16. Fair Isaac (FICO) Fri, Apr 25
  17. MSCI Inc (MSCI) Tue, Apr 22
  18. Tyler Techn (TYL) Wed, Apr 23
  19. VeriSign Inc (VRSN) Thu, Apr 24
  20. SS&C Techn (SSNC) Thu, Apr 24
  21. Manhattan Assoc (MANH) Tue, Apr 22
  22. CACI Intl (CACI) Wed, Apr 23
  23. Interpublic Group (IPG) Thu, Apr 24
  24. Roku Inc (ROKU) Fri, Apr 25
  25. Appfolio Inc (APPF) Thu, Apr 24
  26. Pegasystems (PEGA) Tue, Apr 22
  27. Silicon Lab (SLAB) Thu, Apr 24
  28. Iridium C (IRDM) Tue, Apr 22
  29. Impinj Inc (PI) Wed, Apr 23
  30. Dassault Syst (DSY FP) Thu, Apr 24
  31. Nokia Oyj (NOKIA FH) Thu, Apr 24
  32. Check Point (CHKP) Wed, Apr 23
  33. STMicro (STMPA FP) Thu, Apr 24
  34. Rogers (RCI/B CN) Wed, Apr 23
  35. Mobileye (MBLY) Thu, Apr 24

Homebuilders

  1. NVR Inc (NVR) Tue, Apr 22
  2. PulteGroup (PHM) Tue, Apr 22
  3. Taylor Morrison (TMHC) Wed, Apr 23
  4. Meritage (MTH) Wed, Apr 23
  5. M/I Homes (MHO) Wed, Apr 23
  6. Tri Pointe Home (TPH) Thu, Apr 24
  7. Century C (CCS) Wed, Apr 23

Travel Leisure

  1. United Rentals (URI) Wed, Apr 23
  2. Las Vegas Sand (LVS) Wed, Apr 23
  3. Southwest Air (LUV) Thu, Apr 24
  4. Churchill Down (CHDN) Wed, Apr 23
  5. American Air (AAL) Thu, Apr 24
  6. Alaska Air (ALK) Wed, Apr 23
  7. Boyd Gaming (BYD) Thu, Apr 24
  8. SkyWest Inc (SKYW) Thu, Apr 24
  9. Travel + Leisure (TNL) Wed, Apr 23
  10. Harley-Davidson (HOG) Fri, Apr 25
  11. Monarch Casino (MCRI) Tue, Apr 22

Consumers

  1. Procter & Gamble (PG) Thu, Apr 24
  2. Philip Morris (PM) Wed, Apr 23
  3. PepsiCo Inc (PEP) Thu, Apr 24
  4. O’Reilly Auto (ORLY) Wed, Apr 23
  5. Colgate-Palmolive (CL) Fri, Apr 25
  6. Moody’s Corp (MCO) Tue, Apr 22
  7. Chipotle Mexican (CMG) Wed, Apr 23
  8. Keurig Dr Pepper (KDP) Thu, Apr 24
  9. Kimberly-Clark (KMB) Tue, Apr 22
  10. Equifax Inc (EFX) Tue, Apr 22
  11. Rollins Inc (ROL) Wed, Apr 23
  12. Tractor Supply (TSCO) Thu, Apr 24
  13. Watsco Inc (WSO) Wed, Apr 23
  14. Genuine Parts (GPC) Tue, Apr 22
  15. TransUnion (TRU) Thu, Apr 24
  16. Avery Dennison (AVY) Wed, Apr 23
  17. Pool Corp (POOL) Thu, Apr 24
  18. LKQ Corp (LKQ) Thu, Apr 24
  19. Allison Transm (ALSN) Fri, Apr 25
  20. Lithia Motor (LAD) Wed, Apr 23
  21. Hasbro Inc (HAS) Thu, Apr 24
  22. Skechers USA (SKX) Thu, Apr 24
  23. ADT Inc (ADT) Thu, Apr 24
  24. AutoNation (AN) Fri, Apr 25
  25. FTI Consulting (FCN) Thu, Apr 24
  26. Group 1 Auto (GPI) Thu, Apr 24
  27. Gentex Corp (GNTX) Fri, Apr 25
  28. Darling Ingr (DAR) Thu, Apr 24
  29. Robert Half Inc (RHI) Fri, Apr 25
  30. Whirlpool (WHR) Wed, Apr 23
  31. CBIZ Inc (CBZ) Fri, Apr 25
  32. TriNet Group (TNET) Fri, Apr 25
  33. Boston Beer (SAM) Thu, Apr 24
  34. Tootsie Roll (TR) Thu, Apr 24
  35. Visteon Corp (VC) Thu, Apr 24

Basic Materials

  1. Southern Copper (SCCO) Fri, Apr 25
  2. Newmont (NEM) Wed, Apr 23
  3. Agnico Eagle (AEM CN) Thu, Apr 24
  4. Freeport (FCX) Thu, Apr 24
  5. Vale SA (VALE3 BZ) Thu, Apr 24
  6. Dow Inc (DOW) Thu, Apr 24
  7. LyondellBasell (LYB) Fri, Apr 25
  8. Steel Dynamic (STLD) Tue, Apr 22
  9. Teck Resources (TECK/B CN) Thu, Apr 24
  10. Reliance Inc (RS) Wed, Apr 23
  11. First Quantum (FM CN) Wed, Apr 23
  12. Eastman Chem (EMN) Thu, Apr 24
  13. Carpenter Techn (CRS) Thu, Apr 24
  14. NewMarket (NEU) Wed, Apr 23
  15. Balchem Corp (BCPC) Thu, Apr 24
  16. Element Solution (ESI) Wed, Apr 23
  17. Sensient Techn (SXT) Fri, Apr 25
  18. Minerals Techn (MTX) Thu, Apr 24
  19. Vedanta Ltd (VEDL IN) Fri, Apr 25
  20. UPM-Kymmene Oyj (UPM FH) Thu, Apr 24
  21. Akzo Nobel NV (AKZA NA) Wed, Apr 23
  22. Boliden AB (BOL SS) Wed, Apr 23
  23. Yara Intl ASA (YAR NO) Fri, Apr 25

Energy

  1. Schlumberger NV (SLB) Fri, Apr 25
  2. Phillips 66 (PSX) Fri, Apr 25
  3. Baker Hughes (BKR) Tue, Apr 22
  4. Valero Energy (VLO) Thu, Apr 24
  5. EQT Corp (EQT) Tue, Apr 22
  6. Halliburton (HAL) Tue, Apr 22
  7. Hess Midstream (HESM) Fri, Apr 25
  8. Range Resources (RRC) Tue, Apr 22
  9. Enphase Energy (ENPH) Tue, Apr 22
  10. Matador Res (MTDR) Wed, Apr 23
  11. ChampionX (CHX) Thu, Apr 24
  12. CNX Resources (CNX) Thu, Apr 24
  13. Whitecap Res (WCP CN) Wed, Apr 23
  14. Weatherford (WFRD) Tue, Apr 22
  15. Patterson-UTI (PTEN) Wed, Apr 23
  16. Oceaneering (OII) Wed, Apr 23
  17. Advantage Energy (AAV CN) Fri, Apr 25
  18. RPC Inc (RES) Thu, Apr 24
  19. Helix Energy (HLX) Wed, Apr 23

Insurers

  1. Hartford Insurance (HIG) Thu, Apr 24
  2. W R Berkley (WRB) Mon, Apr 21
  3. Erie Indemnity (ERIE) Thu, Apr 24
  4. Kinsale Capital (KNSL) Thu, Apr 24
  5. Old Republic Intl (ORI) Thu, Apr 24
  6. RLI Corp (RLI) Wed, Apr 23
  7. First American Fi (FAF) Wed, Apr 23
  8. Selective Insurance (SIGI) Wed, Apr 23
  9. Goosehead Insurance (GSHD) Wed, Apr 23
  10. Stewart Info (STC) Wed, Apr 23

REITs

  1. Digital Realty (DLR) Thu, Apr 24
  2. Weyerhaeuser Co (WY) Thu, Apr 24
  3. Gaming and Leisure (GLPI) Thu, Apr 24
  4. Healthpeak Prop (DOC) Thu, Apr 24
  5. Equity LifeStyle (ELS) Mon, Apr 21
  6. Agree Realty (ADC) Tue, Apr 22
  7. EastGroup Prop (EGP) Wed, Apr 23
  8. AGNC Investment (AGNC) Mon, Apr 21
  9. Essential Prop (EPRT) Wed, Apr 23
  10. Rithm Capital (RITM) Fri, Apr 25
  11. Phillips Edison (PECO) Thu, Apr 24
  12. Curbline Prop (CURB) Thu, Apr 24
  13. Getty Realty (GTY) Wed, Apr 23
  14. Veris Residential (VRE) Wed, Apr 23
  15. Ladder Capital (LADR) Fri, Apr 25
  16. Alexander & Baldwin (ALEX) Thu, Apr 24
  17. Apollo R Est (ARI) Thu, Apr 24
  18. ARMOUR Resi (ARR) Fri, Apr 25
  19. Dynex Capital (DX) Mon, Apr 21
  20. PennyMac M (PMT) Tue, Apr 22

Financials

  1. CME Group (CME) Wed, Apr 23
  2. Capital One (COF) Tue, Apr 22
  3. Ameriprise (AMP) Thu, Apr 24
  4. Nasdaq Inc (NDAQ) Thu, Apr 24
  5. Discover Fi (DFS) Wed, Apr 23
  6. CBRE Group (CBRE) Thu, Apr 24
  7. Raymond James (RJF) Wed, Apr 23
  8. First Citizens B (FCNCA) Thu, Apr 24
  9. Chubb Ltd (CB) Tue, Apr 22
  10. BNP Paribas SA (BNP FP) Thu, Apr 24
  11. Aon PLC (AON) Fri, Apr 25
  12. Synchrony (SYF) Tue, Apr 22
  13. Northern Trust (NTRS) Tue, Apr 22
  14. Principal Fincl (PFG) Thu, Apr 24
  15. East West Banc (EWBC) Tue, Apr 22
  16. SEI Investments (SEIC) Wed, Apr 23
  17. Stifel Financial (SF) Thu, Apr 24
  18. SouthState Corp (SSB) Thu, Apr 24
  19. Webster Fincl (WBS) Thu, Apr 24
  20. Western Alliance (WAL) Mon, Apr 21
  21. Mr Cooper Group (COOP) Wed, Apr 23
  22. Comerica Inc (CMA) Mon, Apr 21
  23. Wintrust Financial (WTFC) Mon, Apr 21
  24. Zions Bancorp (ZION) Mon, Apr 21
  25. Prosperity Banc (PB) Wed, Apr 23
  26. Old National Banc (ONB) Tue, Apr 22
  27. Virtu Financial (VIRT) Wed, Apr 23
  28. BOK Financial (BOKF) Mon, Apr 21
  29. Invesco Ltd (IVZ) Tue, Apr 22
  30. SLM Corp (SLM) Thu, Apr 24
  31. Columbia Banking (COLB) Thu, Apr 24
  32. Valley National B (VLY) Thu, Apr 24
  33. Glacier Bancorp (GBCI) Thu, Apr 24
  34. AllianceBernstein (AB) Thu, Apr 24
  35. Piper Sandler Cos (PIPR) Fri, Apr 25

HCare

  1. AbbVie (ABBV) Fri, Apr 25
  2. Sanofi SA (SAN FP) Thu, Apr 24
  3. Merck (MRK) Thu, Apr 24
  4. Intuitive Surgical (ISRG) Tue, Apr 22
  5. Thermo Fisher (TMO) Wed, Apr 23
  6. Boston Scientific (BSX) Wed, Apr 23
  7. Danaher Corp (DHR) Tue, Apr 22
  8. Gilead (GILD) Thu, Apr 24
  9. Bristol-Myers (BMY) Thu, Apr 24
  10. Elevance Health (ELV) Tue, Apr 22
  11. HCA Health (HCA) Fri, Apr 25
  12. Edwards Life (EW) Wed, Apr 23
  13. ResMed Inc (RMD) Wed, Apr 23
  14. Centene Corp (CNC) Fri, Apr 25
  15. Quest Diagnostic (DGX) Tue, Apr 22
  16. Molina Health (MOH) Wed, Apr 23
  17. West Pharma (WST) Thu, Apr 24
  18. BioMarin Pharm (BMRN) Thu, Apr 24
  19. Penumbra Inc (PEN) Wed, Apr 23
  20. Avantor Inc (AVTR) Fri, Apr 25
  21. Encompass Health (EHC) Thu, Apr 24
  22. Medpace Holding (MEDP) Mon, Apr 21
  23. Chemed Corp (CHE) Wed, Apr 23
  24. Merit Medical (MMSI) Thu, Apr 24
  25. Integer Holding (ITGR) Thu, Apr 24
  26. PTC Therapeutics (PTCT) Fri, Apr 25
  27. Amedisys Inc (AMED) Thu, Apr 24
  28. PROCEPT Bio (PRCT) Thu, Apr 24
  29. Viking Thera (VKTX) Thu, Apr 24
  30. Kiniksa Pharma (KNSA) Wed, Apr 23
  31. PACS Group (PACS) Wed, Apr 23
  32. Teladoc Health (TDOC) Fri, Apr 25

AeroSpace/Defense

  1. General Electric (GE) Tue, Apr 22
  2. RTX Corp (RTX) Tue, Apr 22
  3. Boeing Co (BA) Wed, Apr 23
  4. Lockheed Martin (LMT) Tue, Apr 22
  5. Northrop (NOC) Tue, Apr 22
  6. General Dynamic (GD) Wed, Apr 23
  7. L3Harris (LHX) Thu, Apr 24
  8. Textron Inc (TXT) Thu, Apr 24
  9. Moog Inc (MOG/A) Fri, Apr 25

Industrials

  1. Union Pacific (UNP) Thu, Apr 24
  2. GE Vernova (GEV) Wed, Apr 23
  3. Amphenol (APH) Wed, Apr 23
  4. Republic Services (RSG) Thu, Apr 24
  5. 3M Co (MMM) Tue, Apr 22
  6. Carrier Global (CARR) Fri, Apr 25
  7. Norfolk South (NSC) Wed, Apr 23
  8. Otis Worldwide (OTIS) Wed, Apr 23
  9. Old Dominion (ODFL) Wed, Apr 23
  10. Westinghouse Air (WAB) Wed, Apr 23
  11. Vertiv Holding (VRT) Wed, Apr 23
  12. Dover Corp (DOV) Thu, Apr 24
  13. Teledyne Tech (TDY) Wed, Apr 23
  14. Lennox Intl (LII) Wed, Apr 23
  15. Packaging Corp (PKG) Tue, Apr 22
  16. Carlisle Co (CSL) Wed, Apr 23
  17. Graco Inc (GGG) Wed, Apr 23
  18. Masco Corp (MAS) Wed, Apr 23
  19. Comfort System (FIX) Fri, Apr 25
  20. Saia Inc (SAIA) Fri, Apr 25
  21. Mueller Inds (MLI) Wed, Apr 23
  22. Knight-Swift (KNX) Wed, Apr 23
  23. Ryder System (R) Wed, Apr 23
  24. Valmont Inds (VMI) Tue, Apr 22
  25. GATX Corp (GATX) Wed, Apr 23
  26. Zurn Water (ZWS) Tue, Apr 22
  27. Hexcel Corp (HXL) Mon, Apr 21
  28. Plexus Corp (PLXS) Wed, Apr 23
  29. OSI System (OSIS) Fri, Apr 25
  30. AZZ Inc (AZZ) Mon, Apr 21
  31. Terex Corp (TEX) Fri, Apr 25
  32. Hub Group (HUBG) Fri, Apr 25
  33. Knowles Corp (KN) Thu, Apr 24
  34. Tutor Perini (TPC) Fri, Apr 25
  35. Apogee Ent (APOG) Thu, Apr 24

Utilities

  1. NextEra Energy (NEE) Wed, Apr 23
  2. Xcel Energy (XEL) Thu, Apr 24
  3. PG&E Corp (PCG) Thu, Apr 24
  4. Entergy Corp (ETR) Thu, Apr 24
  5. DTE Energy (DTE) Fri, Apr 25
  6. CenterPoint (CNP) Thu, Apr 24
  7. FirstEnergy (FE) Wed, Apr 23
  8. CMS Energy (CMS) Thu, Apr 24
  9. Portland Gen (POR) Fri, Apr 25

Have a wonderful holiday weekend!

Best,

Meraki Trading Team

About Meraki Global Advisors

Meraki Global Advisors is a leading outsourced trading firm that eliminates investment managers’ implicit and explicit deadweight loss resulting from inefficient trading desk architectures. With locations in Park City, UT and Hong Kong, Meraki’s best-in-class traders provide conflict-free 24×6 global trading in every asset class, region, and country to hedge funds and asset managers of all sizes. Meraki Global Advisors LLC is a FINRA member and SEC Registered and Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.

For more information, visit the Meraki Global Advisors website and LinkedIn page
Contact:
Mary McAvey
VP of Business Development

American Exceptionalism/ SCOTUS Risk/ Death Cross/ Differentiated Metrics/ 2 Final Thoughts

/in /by

American Exceptionalism

Plenty to unpack this week.

Let’s take a step back and look at some basic charts.

Gold

Breaking out and all-time highs in $ terms:

But, in Euro or Yen terms it is not:

Crude

Looks to be breaking down:

Meanwhile, no flight to safety:

Treasuries, 30yr, 10yr, and 2yr below, not at highs, on a yield basis, but much closer than one would think with the action in Gold and Crude.

So, what is the issue? Looks to be credibility in the $, or more bluntly stated, is the world losing confidence in the United States?

Before we get overly concerned about the juxtaposition of this chart, let’s take a longer look back.

As shown above, we are not in uncharted territory, especially considering who had just won the Presidency in November 2016.

But, as usual, it’s all about context. And heading into this recent period the US Equity market was trading at a premium valuation, some believe, because of “American Exceptionalism”.

According to the below chart, Foreign Investors own 18% of the US stock market. GS is suggesting they have seen heavy supply from this community, specifically in Mag 7, banks, and industrials. If this investor base is questioning the US exceptionalism thesis (and currently in the process of cutting their portfolio’s overall weighting dedicated towards US equities) then there may still be more selling to come.

To put this in a different perspective, Foreigners own $19 trillion in US equities, $7 trillion in Treasuries, and $5 trillion in US credit, see chart below.

That corresponds to 20% of US equities, 30% of Treasuries, and 30% of credit outstanding. – Apollo

Recent equity volumes would suggest that all investors were running for the checkout lines at the same time.

Listed below are the eleven occasions that US market has seen over 20b share volume days.

Out of these eleven days, 3 were major ‘index rebalance’ days. So only 8 days really matter. Out of the 8 that matter, 6 have been during the last 7 trading days.

Below:

  1. 4/9/2025 = 30.493b shares
  2. 4/7/2025 = 29.097b shares
  3. 4/4/2025 = 26.623b shares
  4. 4/10/2025 = 23.847b shares
  5. 1/27/2021 = 23.674b shares
  6. 12/20/2024 = 23.508b shares (rebalance day)
  7. 4/8/2025 = 23.475b shares
  8. 3/21/2025 = 21.035b shares (rebalance day)
  9. 4/3/2025 = 20.925b shares
  10. 1/7/2025 = 20.842b shares (DeepSeek reaction? Mag7 was hit hard)
  11. 9/20/2024 = 20.807b shares (rebalance day)

So, yes, there could easily be more selling pressure to come in each of the 3 buckets above, but with respect to equities should we really think it possible Foreign sellers will be selling the market closer to a bottoming multiple than a premium one?

Closer we get to a 17X, it becomes harder to believe that selling will be taking place simply for the sake of liquidation. Rational market theory would suggest otherwise.

As we all know, all it takes is one tweet about a Chinese deal and a large rally could easily manifest in the US equity market.

SCOTUS Risk

Only because of the exceptional volatility did we not lead with the below article this week. This easily could be the most impactful market event in years if it plays out as described below.

See the 3rd bullet point:

It may be a stretch, but could the potential politicalization of the Federal Reserve be contributing to the loss of confidence in the US markets/”American Exceptionalism”?

Death Cross

Should we be concerned that the death cross is imminent?

The last time we experienced the 50 day Moving average travel below the 200 day was early 2022, and it resulted in an almost 18% pull back in the SPX Index.

2 Differentiated Metrics

We have alluded to both of these metrics previously. They both would seem to indicate the real economy is slowing faster than other Marco metrics suggest.

The first is the Atlanta Fed GDP Now forecast. It presently has Q1 GDP coming in negatively.

https://twitter.com/AtlantaFed/status/1910001380103684264

We mention this because we are now hearing/seeing anecdotal information related to the tariffs that suggest commerce is freezing up.

So, yes, this is only one example. But, we heard the CEO of the long beach port interviewed earlier this week on CNBC. His call was that 2H 2025 volumes could slow by anywhere from 10% to 20%.

We wanted to see what they looked like YTD already.

As shown above, volumes are already down 19% YTD, so another 10 to 20% would place them in line with previous periods where in fact a Recession did occur as those volumes slid closer to 30% down.

Making the Atlanta GDP Now metric all that more plausible.

The other differentiated metric we keep an eye on is a little more off the beaten path, but we think it may start to pick up some more credibility in the near future.

https://truflation.com/marketplace/us-inflation-rate

The CPI was released this week:

The YoY CPI came in at 2.4%. Two months ago the Truflation metric had their call at 2.42%. So, we are starting to wonder whether this metric is a helpful read on forthcoming CPI reports. If so, one could easily argue that the Federal Reserve’s dual mandate may be down to just a focus on one going forward.

We sure hope that is the case, because the higher rates for longer is only continuing to freeze the Home buyer’s market.

According to the Federal Reserve Bank of NY, 42% of mortgage refi applications are rejected.

To put refi’s in context, below is a chart showing how they are presently only 25% of the high levels in 2020, and half the levels in 2016 pre pandemic. Yet with yields higher, the 10yr TSY is the lower panel around 4.4%, it certainly does not look like this market will come to aid a falling  US GDP in any way.

2 Final Thoughts

Couple final thoughts to leave you with:

https://x.com/TruthGundlach/status/1910479456923508930    

Tim Cook explains why Apple chooses China for manufacturing.

Can America replace this?

https://x.com/AdameMedia/status/1910598431254491449 

Have a great weekend!

Best,

Meraki Trading Team

About Meraki Global Advisors

Meraki Global Advisors is a leading outsourced trading firm that eliminates investment managers’ implicit and explicit deadweight loss resulting from inefficient trading desk architectures. With locations in Park City, UT and Hong Kong, Meraki’s best-in-class traders provide conflict-free 24×6 global trading in every asset class, region, and country to hedge funds and asset managers of all sizes. Meraki Global Advisors LLC is a FINRA member and SEC Registered and Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.

For more information, visit the Meraki Global Advisors website and LinkedIn page
Contact:
Mary McAvey
VP of Business Development

Couple Charts to run through

/in /by

Where to start after a week like that?

When market volatility explodes there is no shortage of content floating around. We thought going back to some simple basic charts for perspective might be helpful.

The $ has now round tripped its election move.


The 10yr TSY.

Adding HRH, Historical Return Histogram below as well, to show magnitude of recent moves.

The VIX Index. With the introduction of ODTE options, some could argue the importance of this fear gauge has been slightly diminished, but we certainly think its still worth watching.

Goldman Sachs Financial Conditions Index. Unfortunately, there is still room for this Index to move higher, and thus financial conditions could certainly still get tighter from here.

High Yield & CDS

Bloomberg US Corporate High Yield Average OAS

Surpassing August 2024 highs.

CDX HY CDSI GEN 5Y SPR:

As shown above both indices appear to be breaking from a down trend.

Hard to believe that Nonfarm Payroll release would take a back seat to any market impactful news, but today it most certainly did. Along with the Nonfarm payroll release come Hourly earnings metrics.

We wanted to look into the relationship between the Average Hourly earnings YoY and the Federal Reserve’s choice inflationary measure, Core PCE YoY.

Respective charts:

If we make the above 2 metrics a ratio, AHE YoY – PCE CYoY, we will generate the below chart in the top panel.

If the declining trend in average hourly wage growth continues the white line will continue moving lower. A concern is that the Core PCE is expected to move higher at the same time, most likely driving the white line down to or below 0. As shown above, when this ratio dips below that level, the Forward multiple on the SPX settles in somewhere between 12 and 17X usually. Still a long way from the most recent level of close to 21X.

Goldman Sachs addresses the impact of lower multiples as well in their scenario metric below.

This week’s impact on the Fed futures market.


Looking at the 12/10/2025 meeting below, it suggests 3 cuts as of Monday, March 31st.

Fast forward to today, Friday, April 4th that number moves to 4+ cuts now.

Chairmen Powell just finished speaking at a schedule engagement a little while ago. His message was simple: the Fed is in a great spot to sit back and see what happens with the tariff impact AND THEN determine what action to take.

Well, as shown by the WIRP page above, the market is starting to think differently.

There has always been a belief that the Fed follows the direction of the 2yr TSY, if it moves to far away from the Fed Funds rate, eventually the Fed must simply catch up.

Well, below we chart this thesis. The top panel has both the 2yr TSY and the Fed Funds rate. The middle panel contains the spread of those 2 constituents. The bottom panel contains the 10yr TSY.
If the 2yr TSY continues to move lower, it would seem reasonable to assume the Fed will have to follow.

Have a great weekend!

Best,

Meraki Trading Team

About Meraki Global Advisors

Meraki Global Advisors is a leading outsourced trading firm that eliminates investment managers’ implicit and explicit deadweight loss resulting from inefficient trading desk architectures. With locations in Park City, UT and Hong Kong, Meraki’s best-in-class traders provide conflict-free 24×6 global trading in every asset class, region, and country to hedge funds and asset managers of all sizes. Meraki Global Advisors LLC is a FINRA member and SEC Registered and Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.

For more information, visit the Meraki Global Advisors website and LinkedIn page
Contact:
Mary McAvey
VP of Business Development

Consumer/ Commodities/ Levered loans vs High Yield

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Navigating the Consumer

Historically the consumer represents about 2/3rds of the nation’s gross domestic product. So, one would think that understanding the state of the consumer would help provide guidance for navigating the equity markets?

If we start with spending, the consumer appears solid. Simplest way to look at this would be to view the stock performance of Visa or Mastercard.

Over the preceding 52 weeks, both names are performing well, up 26% and 16% respectively.

The Economic data on Income and Spending, reported today, also show that the consumer is on solid footing:

But, “Real” personal spending, or in other words “inflation adjusted”, shows some signs of weakness, with a negative previous print that was also revised lower, and a miss of the estimate today.

Both metrics above are considered “hard” data, it’s the “soft” data or survey-based metrics that have many wondering about the direction of the consumer.

Earlier in the week the Conference Board’s Consumer Confidence Expectations metric was released, and it was the lowest reading in over 10 years.

The problem with the above chart is its relationship to the Forward multiple on the SPX.

As shown above, when the survey approaches the 65 level or lower the multiple generally trends toward the 17X level, nowhere close to the present Fwd. multiple of 21.5X.

The University of Michigan has plenty of different surveys, one was released today, which we will discuss below, but first we wanted to point out their survey on the probability of real income gains in the next 5 years.

If the consumer does not expect to have increased future income, then why would they keep spending at current levels, let alone increase their spending?


From U of Mich website:
https://data.sca.isr.umich.edu/charts.php 

Using the excel data available on the above link, we overlaid the above chart in Bloomberg. We added retail sales, in the middle panel, and the 4-week unemployment claims index, in the bottom panel.

Hard to believe sales don’t slow and that claims do not go higher?

As mentioned above, today the latest U of M Consumer Sentiment was released. It came in with one of the 5 lowest readings in the last 25 years. Like above, we have added the Fwd. SPX P/E multiple for perspective.


We think the above chart speaks for itself.


Why is it so hard to navigate?

We would like to offer an example we witnessed this week.

Used car pricing.

Bloomberg ran a story this past week on Wednesday, March 26th, pointing out that Auto repossessions have recently surged to their highest level since 2009.

“In 2024, roughly 1.73 million vehicles were seized, according to data from Cox Automotive, up 16% from the year prior and 43% compared with 2022. The last time repos hit this level the US economy was reeling from the financial crisis.

The figures are another indication that consumers are struggling to keep up with their monthly bills, thanks to both elevated interest rates and the lingering effects of higher car prices.”

One economist interpreted this as meaning used car prices will be declining soon. Seems logical to us.

Fast forward to later that day after the close, Pres Trump announces part of his tariff plan, yes for the time being, and then the following day the auto companies all trade lower. Expected we would say.

What was not expected, at least as demonstrated by the stock reaction, was that companies with used car exposure would trade straight up. After all, we have reason to believe used car pricing is headed lower?

Two names up 20+% in 2 days, safe to say the market was caught off guard by the magnitude of the moves.

Our point is that it is becoming incredibly difficult to navigate these markets. What one can do is try to boil things down to a few simple factors or factor, and that brings us back to the consumer, who is after all the driving force behind 2/3rds of the economy.

As discussed at the top, according to the Credit card companies and the hard data, the consumer is on solid footing. But many discretionary names, or more accurately their stock prices, are telling a different story.

Today, LULU was the latest casualty, but there are plenty of other examples away from the 4 names shown below, including but not limited to the cruise names, airlines, and hotel space.

Why point out the discretionary names specifically?

The final 2 charts of this discussion help tie up the point.

Utilizing data from Moody’s Analytics, Americans earning > $250,000 a year account for approximately 1/2 of all consumer spending in Q3 2024, up from 1/3 in 1990s. In other words, 10% of the population control 33% of the GDP, 66% of GDP is the consumer.

This same demographic is also overly represented in the equity market.

What happens to spending if the equity market takes a further hit?

Just to add one further twist, keeping with the confusion theme, this market is setting up for a rally due to counterintuitive reasons.

“Expectation for higher vs lower stock prices lowest since 2010.  When people anticipate something they tend to prepare by acting accordingly, hence this is a contrarian indicator supported by our policy uncertainty and other sentiment surveys.”


it’s all very confusing.


Commodities

The daily stuff appears to be headed in the right direction.

The ”dig it out of the ground” stuff is headed the other way.
Copper in top panel, Gold in bottom. Both all time highs.

Levered loans vs High Yield

One quick chart that may concern some. Are levered loans leading high yield spreads? Is this a precursor to spreads widening?

Finally, we could not help ourselves….

Have a great weekend!

Best,

Meraki Trading Team

About Meraki Global Advisors

Meraki Global Advisors is a leading outsourced trading firm that eliminates investment managers’ implicit and explicit deadweight loss resulting from inefficient trading desk architectures. With locations in Park City, UT and Hong Kong, Meraki’s best-in-class traders provide conflict-free 24×6 global trading in every asset class, region, and country to hedge funds and asset managers of all sizes. Meraki Global Advisors LLC is a FINRA member and SEC Registered and Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.

For more information, visit the Meraki Global Advisors website and LinkedIn page
Contact:
Mary McAvey
VP of Business Development

FOMC Meet/ Unemployment/ Delinquencies & Rejections/ GDP Estimates/ US CDS

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Fed Meeting

The Federal Reserve convened their scheduled March meeting this week. There were no expectations for any action to be taken, so the focus was largely on the commentary post the conclusion. We prefer to focus on one of the main outcomes, the DOT plot.

The cluster of red under 2025 at the 3.75 level moving lower to 3.25 and now blue appears to be the most significant move.

That move makes sense to us considering the Committee lowered their year end GDP forecast from 2.1% growth to 1.7%. As well as raise their year end unemployment forecast from 4.3% to 4.4%.
But, the Committee also raised their year end PCE forecast from 2.5% to 2.8%.

So, slower growth but higher prices/inflation?

From the difference in direction 2 of the forecasts are headed above one could see how the Committee is concerned about risks to both of their mandates.

But are their concerns really 2 ways?

The SEP, or Summary of Economic Projections, completed quarterly, shows something a bit different. 18 of the 19 responses to the SEP see upside inflation risks. “The risk weighted core pce diffusion index (number of members see upside minus those who see downside, divided by total) is even more skewed toward upside than June 2022 (peak inflation).”
Translation, the committee appeared to be more concerned with the threat of inflation than they were in 2022 when they hiked by 75bps.

These hard numbers do not seem to jive exactly with Chairmen Powell’s representation of the FOMC stance during the press conference. But the Chairman is politically savvy, and maybe, just maybe, presenting the FOMC stance in such a manner is to help prevent any White House irritability ahead of time?

Unemployment

Oddly enough, the present stance of the FOMC might become justified if some of the existing concerns begin to come to fruition out there regarding unemployment levels rising. With much media focus on the new Department of Government Efficiency, many feel those levels rising are inevitable. As of now though, the numbers do not seem to bear that thesis out.

Government employee’s unemployment claims are classified separately from the individual state data.

Recently they did move meaningfully higher.

But in the grand scheme of things.

There could simply be procedural delays that are accounting for the lack of response, but as of right now it does not look concerning.

So, we thought we would look at the state numbers for non-government employee claims in the surrounding area of the capital.

There is some movement, but nothing jarring, yet.

Longer term view for perspective.

Delinquencies & Rejections

Somewhat of concern if those unemployment numbers do to begin to move higher is the state of the consumer. We have addressed debt levels and their associated costs to the consumer previously but wanted to look at the same issue from a different angle this week. The NY Fed website can offer a vast array of data surrounding the consumer, including rejection rates. Many of these charts are headed in the wrong direction.

As for delinquency data, missing auto payments are starting to be of concern.

Which brings us to the ultimate measure of consumer health, emergency savings. Although the present level should be considered healthy, the delta is headed in the wrong direction, and combined with any employment shock could spell trouble for the consumer’s health.

GDP Estimates

This is partially tongue in cheek, but one would think communication between Atlanta Fed peeps and NY Fed peeps should not be that hard. Granted we are familiar with the volatility of the Atlanta data, but still, they all work for the same department don’t they?

Atlanta is looking for -1.8% Q1 GDP presently.
But NY on the other hand is looking for +2.72% Q1 GDP growth.

With a spread like this, we are surprised the likes of Fan Duel or Draft Kings is not getting in on the action.

US CDS

Finally, we noticed a little pick up in the US Sovereign Credit Default Swap chart this week. Nothing to be concerned with, but we would like to point out that it looks to have broken its 3- year down trend.

Just sayin….

Earnings next week.

  • BYD Co Ltd (BYDDY) Mon, Mar 24
  • Cintas Corp (CTAS) Wed, Mar 26
  • Paychex (PAYX) Wed, Mar 26
  • Lululemon (LULU) Thu, Mar 27
  • Kuaishou (KSHTY) Tue, Mar 25
  • McCormick (MKC) Tue, Mar 25
  • H & M Hennes (HMB SS) Thu, Mar 27
  • Next Plc (NXT LN) Thu, Mar 27
  • Dollar Tree (DLTR) Wed, Mar 26
  • Chewy (CHWY) Wed, Mar 26
  • Porsche Auto (PAH3 GR) Wed, Mar 26
  • Jefferies (JEF) Wed, Mar 26
  • SailPoint (SAIL) Wed, Mar 26
  • TD SYNNEX (SNX) Thu, Mar 27
  • Crown Holding (CCK) Tue, Mar 25
  • GameStop (GME) Tue, Mar 25
  • Smithfield Food (SFD) Tue, Mar 25
  • Kingfisher Plc (KGF LN) Tue, Mar 25
  • KB Home (KBH) Mon, Mar 24
  • RH (RH) Thu, Mar 27
  • Wynn Macau (1128 HK) Thu, Mar 27
  • Oklo Inc (OKLO) Mon, Mar 24
  • HB Fuller (FUL) Wed, Mar 26
  • AAR Corp (AIR) Thu, Mar 27
  • Worthington (WOR) Tue, Mar 25
  • Verint System (VRNT) Wed, Mar 26
  • Steelcase Inc (SCS) Wed, Mar 26
  • Intuitive Mach (LUNR) Mon, Mar 24
  • Harrow Inc (HROW) Fri, Mar 28

Have a great weekend!

Best,

Meraki Trading Team

About Meraki Global Advisors

Meraki Global Advisors is a leading outsourced trading firm that eliminates investment managers’ implicit and explicit deadweight loss resulting from inefficient trading desk architectures. With locations in Park City, UT and Hong Kong, Meraki’s best-in-class traders provide conflict-free 24×6 global trading in every asset class, region, and country to hedge funds and asset managers of all sizes. Meraki Global Advisors LLC is a FINRA member and SEC Registered and Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.

For more information, visit the Meraki Global Advisors website and LinkedIn page
Contact:
Mary McAvey
VP of Business Development

Consumer Expectations/ Dow Theory/ Revisiting Employment metrics

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Consumer Expectations:

University of Michigan metrics were released today, and probably to nobody’s surprise they were weaker than estimates. At least 6 different consumer facing companies have mentioned they were seeing reduced consumer confidence recently, RH, DKS, DAL, UAL, KSS, and WMT.

“According to The Wall Street Journal, “Citi’s analysis of its U.S. credit-card data shows that spending has fallen across most retail categories. In the retail quarter to date, spending plunged 12% and 22% on apparel and athletic footwear, respectively, compared with a year earlier. But even less-discretionary categories such as food retail, aftermarket auto parts and pet retail are seeing moderate declines.”

Caution Clouds Walmart and Amazon Outlook as Shoppers Tighten Budgets

The printed numbers showed sentiment is worse than previously thought and inflation expectations are also trending negatively. Not exactly the combination a healthy economy would like to see.

Taking a deeper look at the Expectations Index shows it is challenging the lows from the depths of the pandemic in mid-2022.

We add Adjusted Retail Sales Monthly % change as well to offer perspective of the impact to retail sales when this indicator moves meaningfully lower. As the chart depicts above, there appears to be a negative impact to sales post the significant pullbacks in the Michigan Sentiment, and it’s possible we have yet to experience that post this recent pullback.

Dow Theory:

For all those unfamiliar with the Dow Theory we present the definition as presented by Google.

“The Dow Theory is a technical analysis concept that suggests stock markets move in trends, with primary, secondary, and minor fluctuations, and that these trends can be identified by analyzing the movement of major market averages like the Dow Jones Industrial Average and the Dow Jones Transportation Average, where both indices must confirm each other to signal a trend change; essentially, it states that a market trend is only valid if both averages move in the same direction.”

Why present this? Well it looks to us like the Transportation Index, TRAN Index, is breaking down. Despite today’s bounce, it is approaching the “Bear market threshold” of being down 20% from recent highs.

Looking at the same index relative to the equal weighted SPX, the SPW Index, it appears as if it is approaching a dangerous level. We choose the equal weighted index to try and minimize the magnificent 7 impact.

Back to the strict definition of the theory from above, the below chart shows that the DJ Industrial Index is following suit of the TRAN index.

Now adding the SPX Index, which is the more common barometer for the broader market, and it is also moving right in line with the Industrial Index.

Now, there are some that could make the argument that the Transport Index does not carry the impact significance it has carried in past economic cycles. Not for us to opine on, but we would like to point something out that is similar to what we mentioned last week about corporate spreads starting to widen out a bit, but this time the focus is on CDS. We put together the largest members of each index that have similar Credit Default Swaps openly trading. Is it possible bond holders of some of the most prominent companies in the country are becoming cautious on their outlooks?

TRAN Index

INDU Index

The 4th column from the left in both matrixes show the % that the CDS is trading away from its 52-week high. The farthest left column offers the % from its all-time high. 8 of the 10 names in the TRAN Index CDS are trading within 10% of their 52-week highs, while 2 of the 10 are within 10% of their all time CDS highs.

With respect to the Dow Jones Industrial Index, 6 of the 10 names are trading within 10% of their 52-week highs, while only 1 name is within 10% of its all-time high.

So, what is the takeaway here, like the corporate spread point last week, the absolute levels are not threatening in the grand scheme of things, but the delta on the moves in CDS relative to their 52-week performance is notable, especially within the Transportation Index. From a very simplistic point of view, it is hard to see the economy improving if the companies that move goods are not fairing too well.

Revisiting Employment metrics:

Bank of America published a chart this week we thought looked familiar.

It was published with this commentary:

“One year ago, 85% of US job market growth was in government and sectors dependent on government spending like health and education.”

“The global handoff from big government to the free market may prove slippery, but it seems necessary given large deficits and bloated debt burdens. Economic growth has been enabled by unsustainable government upport and protectionist policies.

It may take time for private sector job growth to accelerate, for government workers to resettle, for broad-based corporate profits to rise, and for global trade to find a new equilibrium. In our view, the likely productivity gains from a market-based economic reboot are greater than risks; and the risks from the unsustainable status quo of debt-financed, tepid, and narrow economic growth are severe.”

– Jared Woodard, BofA Global Research, March 12, 2025

We agree, and for those that might remember, we offered some charts a few weeks back suggesting the same point.

The above shows the % of Government job contribution as well as Healthcare and Education to the overall Non-Farm Payroll number. The simple point is if Government jobs will be trending lower as well as Health Care and Education, as a casualty of reduced Government spending, then the NFP may be in for some rough sailing going forward.

Next Week:

Next week eleven central banks have rate calls: FOMC, BoE, BoJ, Brazil, Swiss SNB, Sweden Riskbank, Iceland, Indonesia, South Africa, Taiwan and Chile

Other key events next week are:

  • Nvidia GTC; Jensen keynote Tues 3/18 at 1pm EST
  • China State Council briefing Monday re economic plans
  • US macro: ret sales, Empire Mfg, inds prodn, Philly Fed
  • US housing data: housing starts, existing homes, NAHB Housing
  • UST auction: $13b 20y and $18b 10y TIPS
  • EU data: Germany ZEW, Eurozone CPI, UK unemployment
  • China Macro: prop px, ret sales, inds prodn, prime rates
  • Japan: Aside from BoJ we have CPI, Inds Prodn
  • Oppie 35th Annual HCare conference
  • Piper 25th Energy Conference
  • RBC Opthalmology Conference
  • BofA Global Industrials Conference
  • Baidu to launch next gen of AI model, Ernie 4.5
  • Busiest week of EPS for China (sent separate email)
  • US EPS: ACN, NKE, MU, FDX, GIS, LEN, CCL, LULU focus

Have a great weekend!

Best,

Meraki Trading Team

About Meraki Global Advisors

Meraki Global Advisors is a leading outsourced trading firm that eliminates investment managers’ implicit and explicit deadweight loss resulting from inefficient trading desk architectures. With locations in Park City, UT and Hong Kong, Meraki’s best-in-class traders provide conflict-free 24×6 global trading in every asset class, region, and country to hedge funds and asset managers of all sizes. Meraki Global Advisors LLC is a FINRA member and SEC Registered and Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.

For more information, visit the Meraki Global Advisors website and LinkedIn page
Contact:
Mary McAvey
VP of Business Development

Spreads/ Charts/ Inflation or Employment/ The $

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Spreads

What may have been the most popular chart of the week, came from the Atlanta Fed.

There is no denying this is a volatile metric, but the extent of the move caught more than a few off guard.

The data seemed to show a vast effort by U.S. businesses to ramp up foreign buying ahead of new tariffs. Economists worried that was a bad sign for U.S. economic growth in the first quarter of 2025, because imports are subtracted from GDP.

Analysts at Goldman Sachs offered a different explanation over the weekend: They think the big pickup in imports is mostly due to a flood of gold bars heading to the U.S., a hot trade that reflects the complex financial market for the precious metal and a split in the prices of gold in London versus New York.”  

If GDP were to be headed for negative future prints we thought taking a look into credit spreads might be warranted.

Are they moving up in anticipation of a slowing economy?

Turns out they are starting to.

That blue line above is the SPX Index inverted.

Longer term view.

As shown above, we are a ways away from spreads being near highs, but it appears there is not a lot of room below from this chart.

Another way to look at spreads is comparing them to shorter dated Treasury paper. Below is Moody’s Corporate BAA Bond Index relative to the 3M TSY, it may be signaling what the Atlanta Fed Now forecast is already saying.

As shown above, when the spread compresses below 1, the color red seems to appear.


Charts

When markets head into rough waters many like to fall back on technical charts for guidance. We thought it worth highlighting a few this week.

The VIX Index. Is it breaking out?

With respect to the VIX Index we saw this interesting back test. From 2005 looking at certain levels of the VIX and the 1 week as well as 1-month average forward returns. As well as the Standard Deviation.

So, if the VIX hits 30, the 1-month average return is 1.6%.

200 Day Moving Averages for SPX and NDX

Momentum Basket relative to the SPY.

The Fear Index, VIX, is up and many major averages are breaking down, as defined by trading below their 200 day Moving Averages. This was highly publicized during the week and could only lead to sentiment indicators turning negative.

For perspective, and yes this is only 1 metric, but the FWD P/E multiples are still elevated. A bit of a messy chart below, but it does show pre and post pandemic multiple levels for NDX, blue line, SPX, green line, and SPW-equal weighted SPX, red line.

Only the SPW Index is back to its pre pandemic levels. The other 2, SPX and NDX,  are still 3 or 4 turns higher.

What is the takeaway from all the above charts, the markets are a bit sloppy right now but its hard to say they are cheap on Fwd. P/E basis.

Inflation or Employment

Should Inflation still be the leading concern of the Federal reserve?

According to a service that tries to dynamically calculate it, it probably should not be.  

https://truflation.com/marketplace/us-inflation-rate 

The employment side of the equation saw a few metrics released this week.

One metric that does not appear above is the Challenger US Job cut announcements.

“Outplacement firm Challenger, Gray & Christmas said Thursday that companies planned to cut 172,017 jobs in February, up sharply from 49,795 in January and 84,638 a year ago, posting the highest monthly total since July 2020 during the pandemic and the highest for February since 2009.

The largest layoff count in February was in the government sector, which accounted for 62,242 of the total due to Department of Government Efficiency actions. The retail sector posted the second largest total for the month with 38,956 cuts.”

The most cited reason for layoffs other than DOGE actions was bankruptcy, which accounted for 35,172 of the totals.

We think the above chart is self-explanatory.


The $

The last chart we wanted to point out is the US $, as tracked by the DXY Index. It has fully round tripped since the presidential election. And, yes, it is also below its 200-day moving average. Simply pointing out the move.

Is the honeymoon over?

Some earnings to keep an eye on next week:

Key TMTs                                                                    

  • Oracle Corp (ORCL) Mon, Mar 10    
  • Adobe Inc (ADBE) Wed, Mar 12
  • DocuSign (DOCU) Thu, Mar 13
  • Rubrik Inc (RBRK) Thu, Mar 13
  • Ciena Corp (CIEN) Tue, Mar 11
  • UiPath Inc (PATH) Wed, Mar 12
  • SentinelOne (S) Wed, Mar 12
  • Asana Inc (ASAN) Mon, Mar 10
  • Semtech (SMTC) Thu, Mar 13
  • PagerDuty (PD) Thu, Mar 13
  • Phreesia (PHR) Wed, Mar 12


Key Consumers

  • Inditex (ITX SM) Wed, Mar 12
  • Volkswagen AG (VOW GR) Tue, Mar 11
  • BMW Ag (BMW GR) Fri, Mar 14
  • Dr Ing Porsche (P911 GR) Wed, Mar 12
  • Henkel AG (HEN3 GR) Tue, Mar 11
  • Daimler Truck (DTG GR) Fri, Mar 14
  • Ferguson Ent (FERG) Tue, Mar 11
  • Williams-Sonoma (WSM) Thu, Mar 13
  • Viking Holding (VIK) Tue, Mar 11
  • Dick’s Sporting (DKS) Tue, Mar 11
  • Dollar Gen (DG) Thu, Mar 13
  • American Eagle (AEO) Wed, Mar 12
  • Kohl’s Corp (KSS) Tue, Mar 11
  • Buckle Inc (BKE) Fri, Mar 14
  • Ulta Beauty (ULTA) Thu, Mar 13
  • Casey’s General (CASY) Tue, Mar 11
  • Vail Resorts (MTN) Mon, Mar 10
  • Puma SE (PUM GR) Wed, Mar 12
  • Korn Ferry (KFY) Tue, Mar 11
  • HUGO BOSS (BOSS GR) Thu, Mar 13
  • Afya Ltd (AFYA) Thu, Mar 13
  • G-III Apparel (GIII) Thu, Mar 13

China ADRs

  • Li Auto (LI) Fri, Mar 14
  • Futu Holdings (FUTU) Thu, Mar 13
  • Kanzhun Ltd (BZ) Tue, Mar 11
  • MINISO Group (MNSO) Wed, Mar 12
  • WeRide (WRD) Fri, Mar 14
  • RLX Tech (RLX) Fri, Mar 14
  • Weibo Corp (WB) Thu, Mar 13
  • Hesai Group (HSAI) Mon, Mar 10
  • EHang Holding (EH) Wed, Mar 12
  • Hello Group (MOMO) Wed, Mar 12

Have a wonderful weekend!

Best,

Meraki Trading Team

About Meraki Global Advisors

Meraki Global Advisors is a leading outsourced trading firm that eliminates investment managers’ implicit and explicit deadweight loss resulting from inefficient trading desk architectures. With locations in Park City, UT and Hong Kong, Meraki’s best-in-class traders provide conflict-free 24×6 global trading in every asset class, region, and country to hedge funds and asset managers of all sizes. Meraki Global Advisors LLC is a FINRA member and SEC Registered and Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.

For more information, visit the Meraki Global Advisors website and LinkedIn page
Contact:
Mary McAvey
VP of Business Development

10yr TSY/ China Continued/ Housing Affordability/ Brown Shoots

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10yr TSY

Today, Friday February 28th, there was a fair amount of Economic news released, including the Federal reserve’s preferred inflation metric, PCE. There were some surprises both good and bad:  personal Income better, spending disappointing both in real and inflation adjusted terms. The PCE metrics were all basically in line with expectations.

The reason we mention it is because the true measuring stick is usually the response of the 10yr TSY. At the time of this writing, the 10yr is basically flat on a yield basis. It just so happens to be hovering right around 4.25% yield. Funny enough, we saw a chart earlier in the week that suggested the 4.25% level is rather attractive.

China continued

We would like to revisit a chart from last week that we are still trying to fully understand.

This one:

M1 Money supply for China. Quite the chart!

We noticed a few headlines this week regarding Chinese economic policy on Bloomberg as well.

Monday: China’s local governments are set to issue an unprecedented $233 billion of bonds in the first two months of the year, exacerbating a cash squeeze in the financial system.

Tuesday: China is increasing scrutiny of outbound investments by domestic companies as well as their use of proceeds from Hong Kong share sales, people familiar said.

Wednesday: China plans to inject at least $55 billion into three of its biggest banks, people familiar said. The plan may be completed as soon as June and follows through on a broad stimulus package unveiled in 2024.

The question becomes why is China going through these motions now? The top 6 banks have capital levels that far exceed national capital requirements. Is there something the Chinese Officials see that nobody else does?

What metrics could we look to for evidence that mark to market could be an issue? First thought is home prices.

The Home Price Index suggests prices have been in a negative trajectory since early 2017.

Looking at all property developer and home building names in HSI and CSI indices, we see that despite both broad indexes either being at 52-week highs or within 7% of 52-week highs, the property developer and home builder names in the two indices are on average 22% off their 52-week high.  They are underperforming the broader market. 

Maybe the market senses something as well considering the differential in performance?

China increases the M1, top chart, adding liquidity to the economy. Announces Monday they will sell $233B in bonds to soak some of that liquidity back up, but then also announce they will “increase scrutiny of outbound investments by domestic companies” to keep everything onshore.  More importantly, why now?


As the reader you can draw your own conclusion here on what this data means. 

Housing Affordability

Housing affordability is getting strained fast.  Annual U.S. household income needed to purchase a typical US home.

Jan. 2020 -> $51,646

Jan. 2021 -> $51,740

Jan. 2022 -> $62,669

Jan. 2023 -> $86,184

Jan. 2024 -> $92,006

Jan. 2025 -> $92,538 

5-year shift +79%!   

The result of the above.

Existing home sales making 20+ year lows.

Brown Shoots

Are we starting to see a more consistent flow of data points that suggest the economy is slowing? It sure seemed that way this past week.

Let’s start with Consumer Confidence:

Consumer Confidence Expectations

Initial Jobless Claims

Retail Sentiment

The AAII survey of the US retail investor has just collapsed to -41.2, the 8th lowest reading since the survey started in 1987.

Finally, US Average Weekly Hours Worked could be suggesting pain ahead as well.

Recently, each time the US Average Weekly Hours has dipped below 34.2 hours, a recession has occurred. Granted the 2nd time we were in the midst of a pandemic. GDP is stealthily moving lower, along with the Average Weekly Hours Index already below 34.2, it’s a cross-section of economic data to keep an eye on.

Most recent GDP Now estimate from Atlanta Fed.

Yup, we hate to leave you with that, but that green line is now in negative territory!

Have a great long weekend!

Best,

Meraki Trading Team

About Meraki Global Advisors

Meraki Global Advisors is a leading outsourced trading firm that eliminates investment managers’ implicit and explicit deadweight loss resulting from inefficient trading desk architectures. With locations in Park City, UT and Hong Kong, Meraki’s best-in-class traders provide conflict-free 24×6 global trading in every asset class, region, and country to hedge funds and asset managers of all sizes. Meraki Global Advisors LLC is a FINRA member and SEC Registered and Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.

For more information, visit the Meraki Global Advisors website and LinkedIn page
Contact:
Mary McAvey
VP of Business Development

Home Prices/ China/ Conflicting Charts

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Home Prices

In previous pieces we have presented this input of the CPI, the contribution of Shelter. This input accounts for 36.22% of the YoY CPI. The metric has been slowly but steadily moving lower since the Q2 2023.

We saw a few charts this week that led us to believe the trend above will continue and possibly accelerate.

New Home inventory is approaching some high-capacity levels.

There are now 9 times more new homes for sale than the average number of homes sold per month, the highest since 2022, per Reventure. In other words, it would take 9 months for current inventory of new homes on the market to sell given the current sales pace. This ratio is more than 2 TIMES higher than in 2020. In the past, there were only 4 periods when months of supply were higher than they are now with 3 of them being during recessions. Meanwhile, the number of new single-family homes for sale has risen to 494,000, the highest since the 2008 Financial Crisis. Such a large imbalance suggests price cuts may be coming.

On the rental side we noticed this chart.

US rental vacancy rate from ApartmentList has now surpassed July 2020 peak, as of January, now up to 6.85%.

The 2 charts above inspired us to look at the Existing Home Inventory. As many know, there is a definite seasonality to the existing home selling process, so wanted to look at the growth in inventory on that seasonal basis. Turns out the inventory grew in January the most it has since 2019, pre pandemic.

One Housing specialist we follow suggests the delta on home price increases has gone negative as well.

“Home price appreciation was about 4% to end 2024. It’s closer to 2% now nationally. Lots of local markets are negative YoY.”

The 4 preceding examples would seem to indicate that the first chart above will at the very least continue its present trajectory lower, and if more than 1/3 of the CPI input continues with a negative delta, we think it will be pretty tough for the CPI to surprise to the upside in the near future.



China

This past week there has been a bit of a focus on Chinese related equities. Recent 13F filings revealed that more than a few funds have been increasing their exposure to China. Then we saw this headline on Bloomberg:

“Morgan Stanley strategists have turned optimistic on Chinese stocks, recommending an equal weight position and predicting the MSCI China Index to reach 77 by the end of 2025. The strategists cite a “structural regime shift” in China’s equity market, driven by technological breakthroughs, regulatory shifts, and efforts by companies to boost share value. The upgrade follows similar bullish views from other Wall Street firms, including Goldman Sachs, JPMorgan Chase, and UBS, and suggests a fundamental shift in how global investors approach the Chinese market.  Lombard Odier Investment Managers has increased its overweight position in Chinese stocks this year, betting on the country’s successful transition into a new economy focused on high-value tech.” -BBG

The HSI Index closed up 3.8% this week alone.

Considering the filings, the Bloomberg headline made us wonder if this was simply the sell side following the buyside? Tough to say, wouldn’t be the first time.

But then we came across this chart:

Chinese Money supply. Powerful move!

This might explain the moves better than positioning or sell side upgrades?

We were curious about the correlation. Appears it is strongest with the CSI 300, SHSZ300 Index, at .916.

If the .916 correlation holds, should we expect a multiple re-rating on the CSI 300?

Too many variables to know for sure, but we don’t think it would come as a surprise if the multiple were to elevate toward 16, considering the chart above.

Conflicting Charts

A couple of charts we found somewhat conflicting.

According to the BAML Fund Manager survey, Investors see US Equities as overvalued.

89% of Fund managers now believe U.S Equities are overvalued. That is the most since the Dot Com bubble.

But then there is this statistic. Should the S&P 500 finish February higher, that would mean stocks gained in both Jan and Feb. Rest of year? Higher 93.1% of the time and up 12.3% on avg. Full year up nearly 20% on avg.

Hmmmmm…..

Have a great long weekend!

Best,

Meraki Trading Team

About Meraki Global Advisors

Meraki Global Advisors is a leading outsourced trading firm that eliminates investment managers’ implicit and explicit deadweight loss resulting from inefficient trading desk architectures. With locations in Park City, UT and Hong Kong, Meraki’s best-in-class traders provide conflict-free 24×6 global trading in every asset class, region, and country to hedge funds and asset managers of all sizes. Meraki Global Advisors LLC is a FINRA member and SEC Registered and Meraki Global Advisors (HK) Ltd is licensed and regulated by the Securities & Futures Commission of Hong Kong.

For more information, visit the Meraki Global Advisors website and LinkedIn page
Contact:
Mary McAvey
VP of Business Development