Editor's Note: Below are five charts and brief analysis from institutional research notes written our Financials team – co-led by analyst Josh Steiner – on closely watched industry trends. Email sales@hedgeye.com for info about access to our institutional research.
1. Labor Market Tightness
Yesterday's release revealed that seasonally adjusted initial jobless claims had fallen -2K from 240K to 238K week-over-week. The prior week's number was revised up by +1K from 239K to 240K. Meanwhile, the 4-week rolling average of seasonally-adjusted claims rose +2.3K to 242.3K. In sum, yesterday's release is consistent with the trend of a tight U.S. labor market as 4-week M.A. SA claims continue to dwell along historical lows.
2. Is China a Systemic Risk?
The instability of China's credit-fueled, investment-focused growth strategy is, without doubt, one of the greatest systemic risks facing the global economy.
3. Tech-Focused Hedge Funds Outperforming
A natural consequence of the surge in tech stocks this year, hedge funds with a technology focus have markedly outperformed other strategies, achieving a YTD return of +21%, well above the group median and average of +6% and +8%, respectively.
4. The Slow Slide in U.S. Loan Growth
Domestic loan growth has now decelerated for six straight quarters. Uncertainty regarding the timing and magnitude of pro-growth fiscal and regulatory reform from the Trump administration has likely heightened reservations among both consumer and commercial borrowers. Moreover, rising competition from non-bank institutions and favorable capital markets conditions challenging the appeal of bank debt among commercial borrowers is further impeding loan growth.
5. Volatility Falling Everywhere
The VIX, CVIX, and MOVE, measures of expected future volatility in the S&P 500, currency markets, and in the market for treasuries, respectively, have all broadly trended downward in the last twelve months.
