We covered a lot of ground in our Markets section of our Full Report, but here are 3 data points that expand on that content:
#1: US Google search volumes for both “face mask” and “Lysol” now outnumber those for the entire Kardashian clan. We aren’t trying to poke fun about a serious issue; this comparison shows Americans are quite concerned about their personal health. That, to our thinking, is why large US companies/trade organizations are cancelling mass gatherings and discretionary business travel. People are worried.
#2: Investment grade corporate bond spreads have only just started to move and remain far below prior periods of economic stress, even excluding the Financial Crisis. At 121 basis points over Treasuries, they aren’t even back to 2019 highs (1.36%), let alone 5-year (219 bp) or 10-year highs (272 bp). Remember our caution about Q1 2020 corporate earnings, which are in flux, and also recall that high yield spreads are similarly out-of-sync with current equity market volatility.
Here is the 10-year history of investment grade spreads:
And here is the same data for high yield corporates:
#3: Finally, grab bag of data points from the last week…
… On US equity performance:
- Growth beat value across both US large and small caps. S&P 500 Growth, -10.4%. S&P 500 Value, -12.3%. Russell 2000 Growth, -11.3%. Russell 2000 Value, -12.4%.
- The Momentum factor beat the S&P 500, -10.6% versus -11.9%, and is still well ahead on the year (-3.7% vs. -8.6%).
- S&P Dividend Aristocrats (SDY) only matched the S&P 500’s performance, down 11.9%.
… And a few observations from ETF money flows courtesy of www.xtf.com:
- Outflows totaled $33.5 billion, all of which came out of just 7 funds: SPY (S&P 500, -$21.0 billion), HYG (high yield corporate bonds, -$3.9 billion), LQD (investment grade corporate bonds, -$2.0 billion), QQQ (NASDAQ 100, -$1.9 billion), JNK (high yield corporates, -$1.8 billion), EEM (emerging market equities, -$1.6 billion), and XLF (US large cap financials, -$1.4 billion).
- Inflows into sovereign debt ETFs totaled $3.4 billion, and gold funds received $334 million of fresh money (although a slowdown from the $462/week 2020 average).
- VIX-linked ETFs saw $930 million of outflows last week, headlined by redemptions in VXX (-$541 million) and UVXY (-$309 million). Whatever the VIX was doing last week, in other words, it was not the result of incremental buying by these products.