Courtesy of Goldman Vice President Jacob Malmstrom, here are the top 12 charts on Goldman's trading desk from the past week.
- Even after recent downgrades the potential pipeline for further “fallen angels” in the credit market remains elevated compared to history as high rates takes its toll.
- Several of the US banks performed strongly last year with one of the reason being hopes of a stronger capital markets activity. We haven’t seen this yet and we are still waiting for big M&A transactions too happen as policy uncertainty has taken a toll. So far M&A YTD cumulative volumes of $145bn is down 34% vs same period last year. Noteworthy is also that large transactions >20$bn is missing this year which was 22% of the total volumes between 2020-2024.
- The macro data has come in weaker as of late (retail sales, housing starts, PMI’s) which have led to Goldman's Q1 GDP tracker coming down, which have led to cyclicals underperforming.
- The correlation between US 10yr and stocks has gone strictly negative as of late with the 30bp drop in US 10yr not helping markets (especially tech).
- The systematic community are now sellers with the SPX yesterday reaching 5891 (important threshold), as a result the team now sees $24bn of SPX to sell in a base case over the next week.
- Retail which was a strong force beginning of the year have stepped away from the market as of late evident by several of our retail exposed baskets all down double-digits.
- Looking at Earnings revisions in Europe they’ve turned positive whereas it’s the opposite for the US. However several sectors in Europe still trade at a significant discount relative to their long-term averages.
- The Goldman Econ team already have 0.5% hit to European growth given uncertainty around tariffs, if we would to get 10% global tariffs on all goods this would give an additional 0.5% hit.
Few charts on all of this below
The near-term potential fallen angel pipeline is elevated compared to history: Quarterly snapshots of the USD notional rated BBB- and on downgrade watch by at least one of the three major ratings agencies
