The Tweet/ GDP Estimates/ VIX/ Jamie & Mark/ Next weeks earnings
April 18, 2025 / by Meraki Global Advisors
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:
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!
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