This week we highlight in the links below the 2019 forecasts across the street. We also summarize PeerIQ’s offerings so you can stay one step ahead of the US consumer.
2018 was a volatile year for equity and credit markets, particularly in the fourth quarter. The S&P500 is down ~7.5% for the year, and cyclical stocks are down more. CDX IG spreads have widened ~40 bps and CDX HY spreads have widened ~150bps.
ABS markets enjoyed record issuance. However, spreads widened, and all-in yields were higher leading to rate increases for borrowers and tighter margins for lenders. 2019 is shaping up to be a pivotal year in this late economic cycle. Synchronized global growth could turn into a synchronized slowdown. The risk of policy error is heightened as the Fed navigates record low unemployment and a slowdown in growth. The US yield curve has partially inverted and the all-important 3-month – 10-year yield spread is at ~37 bps. We will continue to keep an eye on these developments in 2019.
On behalf of PeerIQ, we wish you a very happy and prosperous new year!
PeerIQ’s Research Offerings
Below we summarize our public and premium research offerings. PeerIQ offers both public open-access research (such as this newsletter), and paid research such as the consumer credit digest. The research offerings are built on our subscription-as-a-service data & analytics platform – designed for risk managers and investors looking to stay one step ahead of the US consumer.
Consumer Credit Digest – Get an Edge on US Consumer Credit
Looking for insights into how consumer credit has performed during prior periods of market volatility? How are US consumers performing today across asset classes? How are prepayments and losses trending in the personal loan and subprime auto space?
The Digest, published monthly and powered by the TransUnion credit file, is a detailed market report and summary data that allows the reader to track trends in consumer credit with the following features:
· Robust data & coverage, representing the full credit file back to 2000
· Custom metrics and charts, including refinance and attribute migration
· Key stratifications, including risk, age, originator type (e.g. Fintech)
Download a free trial version of the report or contact email@example.com to learn more. The report is also available in PDF format.
PeerIQ’s Loan Performance Monitor
Our MPL Loan Performance Monitor tracks the delinquency rates, cumulative losses, cumulative prepays and transition matrices using public marketplace lending data that comprises unsecured consumer loans originated by Marketplace Lenders. This report is published monthly. Some highlights from the latest (as of September 2018) report are:
· Delinquencies on the 2017 vintage in the first 20 months are the highest that we have seen across vintages
· Cumulative loss rates continue to edge higher
· Cumulative prepayments have picked up, with the 2017 vintage paying significantly faster
PeerIQ’s Marketplace Lending Securitization Tracker
Our Quarterly Securitization Tracker analyzes securitizations of marketplace lending loans. Securitization markets have become a large source of financing for MPL issuers.
The tracker looks at growth in volume, new originators and deal structures and at how existing deals are performing. The tracker lists ratings upgrades, trigger breaches and compares new deals issued in the quarter. You can download the latest Q32018 tracker below. We will publish our 2018Q4 just after the quarter closes.
PeerIQ’s Lending Earnings Insights Report
On a quarterly basis, following earnings announcements, we analyze lender performance with a focus on credit performance trends and forward-looking commentary. We analyze data across three main lender segments: (1) FinTechs & Non-Banks, (2) Large banks, and (3) Card Issuers.
Below are some highlights from our latest report:
· We are in the late stages of the credit cycle
· CEOs of banks and card issuers are sanguine on the economy but are nonetheless taking precautions
· Delinquencies and charge-offs in FinTech asset classes are near all-time lows
· Loan loss provisions have been a tale of two cities. Large banks, except GS, are reducing provisions, while card issuers are increasing them.
· Banks and credit card issuers are catching up in technology spending
- Economic growth is slowing all around the world (Washington Post, 12/25/18) Synchronized global growth at the beginning of the year could be turning into a synchronized slowdown as we enter 2019.
- Outlook 2019: Can regulators finish what they started? (American Banker, 12/26/18) Deregulation in 2018 has included the new FinTech charter, encouragement from the FDIC for new bank charters and a roadmap for revamping the CRA. Regulators should continue on this path and complete these initiatives.
- Goldman’s $1 Trillion Asset Manager Is Betting on Stocks in 2019 (Bloomberg, 12/19/18) GSAM is bullish on equities in 2019 as it expects strong global growth to support stocks.
- BofA Merrill Lynch 2019 Market Outlook: From Peak to Trough, the Market Unfriends Stocks and Bonds, Likes Volatility, and Swipes Right on Cash (BusinessWire, 12/4/18) BofA expects a bear market in stocks with a bottom in the first half of 2019 due to slowing global growth.
- The investment outlook for 2019: Late-cycle risks and opportunities (JPMorgan, 11/30/18) JPM Asset Management expects slowing global growth and tighter monetary policy to lead to higher rates and lower equity valuations in 2019.
- Outlook | 2019 Safeguarding assets – Building stronger portfolios for turbulent times (Citibank, Dec 2018) Citi’s Private Bank believes that risk assets will grow in value next year, but investors might want to safeguard their gains.
- 2019 Outlook: Look Beyond U.S. Stocks and Bonds (Morgan Stanley, 12/17/18) MS Wealth Management expects US stocks to underperform their global peers and value stocks to outperform growth stocks.
- UBS House View (UBS, 12/13/18) UBS expects stocks to be volatile in 2019 due to ongoing trade concerns.
- NYCA Partners’ Hans Morris hunts for great fintech investments amid volatility (TechCrunch, 12/27/18) Investments that can withstand a potential slowdown in the economy rank at the top of the list.
- Google’s Year in Search (Google Trends, 12/30/18) From the World Cup to election results, see what was trending in 2018.