Spreads/ Charts/ Inflation or Employment/ The $
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.
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