Charts Charts Charts
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1. Slowing card spend
"Card spending has been slowing since Jan. At the national level, it has not been clearly impacted by regional banking stress”.
2. Slowing card spend (2)
“A sign of consumer confidence cratering — credit card spending has collapsed”.
3. Consumers are not saving
“The US personal savings rate has dropped to near 40 year lows”.
4. Consumer credit tightening
“The University of Michigan asks consumers about credit conditions, and the chart below shows that even before the SVB situation, credit conditions had tightened to levels last seen in 2008”.
5. Bank volatility nears prior crisis levels
“Relative to the market, banks’ equity volatility is already nearing previous crisis levels”.
6. Emergency borrowing surges
“There has been a surge in emergency borrowing amongst US firms. Here's how it compares to previous cycles”.
7. How low can American house prices go?
American house prices are falling in 2023, but are still well above levels seen before the last housing crisis.
8. Credit tightening affects real estate
“Another casualty (and cause) of banking stress is likely going to be all flavors of property… particularly given that all 3 of REITs, commercial real estate, and housing market valuations reached record highs in the wake of the pandemic emergency stimulus measures”.
9. Home buyers really don’t like higher mortgage rates
The share of people saying its a good time to buy a home approached historic lows.
10. Credit spreads spike
Credit spreads have spiked over the past three weeks.
11. Credit spreads spike but not signalling recession
“Analysts at Apollo note that credit spreads are widening, but are still not pricing in a recession".
12. Traders pricing in a recession
“Traders Go All-In on US Recession Bets That Defy Fed View”.
13. One man’s Junk…
“Junk bond spreads are on the rise again, as credit investors begin to rerate the risks of tightening credit and even a potential recession”.
14. So much cash
“US corporates still sitting on enormous amounts of cash”.
15. Big driver of the global economy slowing down
“International commerce soared to a record of $32 trillion in 2022, but goods trade growth is expected to increase by only 1% in the first quarter and remain subdued this year because of a weaker world economy”.
16. Deposits, your loss, their gain
“From March 8th to March 15th, small domestic banks within the United States shed ~$120 billion in deposits across the country. Large domestic banks, defined as the top 25 domestically chartered commercial banks in the country, have seen deposits rise by $66.7 billion”.
17. Small US banks shed 2% of deposit base
“Small US commercial banks lose 2% deposit base the week ending Mar15 (SVB collapse Mar10). But some hints the situation has stabilized since: H4 release: Fed's emergency lending hadn't spread past NY, SF Fed districts -Fed commentary: Powell, Bostic say deposit flow stabilized”.
18. US bank deposits steadily falling since last fall
“Bank deposits aren't just declining due to a lack of trust. There's also another catalyst: inflation. People are spending more to get the same or less, and drawing on their bank accounts and borrowing from credit cards to buy necessities. Many consumers are not faring well”.
19. $600 billion fewer deposits since interest hikes
“Deposits in the banking sector have declined by almost $600bn since the Fed began to raise interest rates, the biggest banking sector deposit outflow on record”.
20. Banks increase borrowing by $475 billion
“From the end of February to March 15th, small and large US banks increased borrowings by more than $500 billion. Collectively, when accounting for the $28 billion in decreased borrowings from foreign-related banks, this amounts to a net increase of ~$475 billion”.
21. Capital markets frozen
“Capital markets have remained essentially closed since SVB went under, and the longer the current stresses persist, the more harmful it will be for the economy”.
22. M&A activity declines but value increases in Feb
“Deal activity for M&A in the US fell 23% in February, but the aggregate deal value was up 136%”.
23. The death of Credit Suisse was coming
“Credit Suisse had been plagued by high-profile issues for years. It lost billions in the failure of hedge fund Achegos Capital and supply-chain financier Greensill Capital back in 2021, had data on $100B worth of accounts leaked to German newspapers in 2022, was probed by the US House of Representatives for its connections to Russian Oligarchs, and was forced to disclose “material weakness” in its financial reporting controls thanks to a last-minute call from the SEC just last week. 7% of Credit Suisse’s total revenue over the last decade went to penalties and fines, leaving the company with a net loss of $3.4B after taxes. The bank was surrounded by rumors of its impending demise for years, bleeding money and confidence while constantly scraping by through a rolling series of disasters”.
24. Debit Suisse
“The surge in bad press and ongoing concerns about the company’s financial health led customers to head for the exits even before the death of Silicon Valley Bank. In Q4 2022, Credit Suisse lost nearly 140B Francs in deposits to a rush of withdrawals that began in October, meaning the bank had lost more than 40% of total deposits since the first quarter of 2021”.
25. Debit Suisse (2)
“Both Credit Suisse and UBS had prominent relationships with non-Swiss customers and had deep ties to other parts of the global financial system. The risks inherent to those exposures are partly why Swiss regulators decided to force a sale of Credit Suisse before it could collapse, but even a more orderly resolution under UBS could still pose risks to the broader financial system”.
26. UBS becomes 3rd largest asset manager
“UBS will also now become the world’s 3rd largest asset management company after taking over Credit Suisse’s operations, behind BlackRock and Vanguard”.
27. Concerns about European banks rising
As recession fears and contagion spread across markets, the share price of some of Europe’s largest banks have fallen as much as 20% over the past month.
28. Fed Hikes 25bps
“In the end, Powell opted to go with the former, acknowledging that while pausing rates were considered, there was a “strong consensus” for 25bps. In fact, it was voted for unanimously”.
29. Flight to gold?
“Traders are betting on further increases in the price of gold after it touched a 12-month high this week, as investors predict the US Federal Reserve’s cycle of interest rate rises is over and seek safe havens during banking sector turmoil. Spot prices for gold this week touched $2,000 per ounce for the first time since the immediate aftermath of Russia’s invasion of Ukraine”.
30. Cyclical lows in unemployment & recessions
“Unemployment remained low in February, at 3.6%. Putting another spin on that, unemployment was up from the 53-year low recorded earlier in the year (3.4%). The Fed expects unemployment to rise to 4.5% by the end of this year and to 4.6% by the end of 2024, so it appears the end of the US’ cyclical low in unemployment might have been and gone”.
31. Analysts see a 17% gain for S&P over next 12 months
“Industry analysts in aggregate predict the S&P 500 will see a price increase of 17.0% over the next 12 months. At the sector level, the Energy sector is expected to see the largest price increase (+31.9%) and Information Technology sector is expected to see the smallest price increase (+6.3%)”.
32. Mentions of “AI” soar
“Mentions of AI have grown significantly since 2015 during S&P 500 company earnings calls, from 207 then to 1,020 in 2022”.
That’s all she wrote!
Thanks for reading,
Conor
Love the graphs, and your titles crack me up! 🤣
Thanks Conor! #29 Flight to Gold is particularly interesting.