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When a blue chip commentator like Yardeni Research ponders whether the recent New York Fed survey of consumers carries an important message, it is worth taking note.

They noted that inflation expectations are subdued but fears about the availability of credit continue to move higher. The conclusion might therefore be the inflation debate is losing traction; the bigger risk for financial markets are credit conditions.

To a degree this is backed up by FactSet's observation that inflation is becoming less frequently mentioned in earnings calls. They note that 296 companies cited "inflation" during Q2 earnings calls - the fourth consecutive quarterly decline and the lowest number of mentions since Q2 2021.

This is where Qi's factor sensitivities come into their own. We capture the independent relationships between asset prices and a host of macro factors. By tracking these historical patterns we can observe how key macro drivers ebb and flow in terms of importance. In effect, how macro regimes shift.

Below we take the eleven S&P500 GICS Level 1 sectors and their relationship with US inflation expectations.

The clear standout is US Technology. All three tech sectors (Tech itself XLK, Communication Services XLC and Consumer Discretionary XLY) have seen strong increases in their sensitivity to inflation, and sensitivity now sits near recent highs. Sectors with a more value and cyclical bias are comparatively insensitive.

So, while respecting the commentary from CFOs during the most recent earnings season, on our metrics it is too early for investors to think inflation no longer matters. Tech, the clear of US equity markets, is reliant on reflation.

Yes, strong inflation that induces policy tightening is a negative for risky assets; but it's the policy reaction equities fear, not reflation itself. Put another way, deflation is a bigger evil.

We then repeat the exercise looking at sensitivity to corporate credit spreads and the same pattern is repeated. It is tech (XLK, XLC, XLY) that screens as the most reliant on credit spreads remaining tight. The other sectors also want a well behaved credit market; it is just that sensitivities are notably less.

The clear pattern therefore is that Technology is beholden to Goldilocks. It is most reliant on rising inflation expectations (sensitivity is at it's highest levels since the pandemic) and tight credit spreads (sensitivity is at the wide end of the ranges).

Goldilocks or bust.

There is a clear geographical split with the Americas the clear beneficiary of higher oil prices. NASDAQ, S&P500 and Brazil's IBOV have all seen sensitivity to crude rise sharply. To a lesser extent TOPIX also benefits.

Some may query those results, especially Japan as a net oil importer. For now, we think this reflects oil's role as a proxy for risk appetite. Some of the gains in crude come from tight supply conditions; but, from the demand side, there are growing hopes global growth will achieve a soft landing.

But if current patterns show US equities enjoying a Goldilocks relationship with energy markets, the same cannot be said for Europe or China. Neither the DAX or CAC enjoy the same positive sensitivity.

The Shanghai Composite, where macro explains 75% of price action, has recently seen sensitivity flip into negative territory - higher oil is threatening to become a drag.

Moving away from indices to single names, stock pickers can use Qi's Optimise Trade Selection function to screen their holdings for sensitivity to crude oil.

Below we show the results from screening across the S&P500 to find the winners and losers from this energy move.

The beneficiaries include a bias to consumer cyclical names - Tesla, Amazon, Carnival, Live Nation.

Carnival stands out. It enjoys a 3.1% gain when crude rallies by one standard deviation. And it screens as cheap to aggregate macro conditions.

Once again, the current pattern is Goldilocks - higher oil is not (yet) a tax on consumption, rather a sign of healthy risk appetite.

The five most vulnerable US stocks are a more eclectic mix. Unlike the retailers cited above, ETSY and Estee Lauder don't enjoy the same positive relationship with energy markets.

Economic orthodoxy states rising crude oil acts as a tax on consumers and businesses. But US exceptionalism means that, for some at least, bad news can be seen as good news. Put another way, crude has yet to rise to that trigger point where it becomes a drag and, for now, Goldilocks trumps Bust.

The equivalent search across Euro Stoxx 600 stocks flips the script back to more conventional results and again highlights how, in Europe, bad news is bad news.

German power generator Uniper screens as the biggest beneficiary from rising crude oil; and it is slightly cheap to macro conditions.

Meanwhile fashion retailer Zalando stands out as amongst the companies that suffers from higher oil and is slightly rich to Qi model fair value.

Measure your own holdings to get visibility on whether your portfolio see's bad news as a headwind or a tailwind.

The soft landing narrative has had good news this week - signs of a softening in the robust US labour market; no fiscal bazooka but incremental policy easing in China; bond yields reverse lower pulling the Dollar down.

But the dilemma facing investors remains sharply unchanged - Goldilocks or Bust is alive and well. And it's at times like these that all market participants, not just contrarians, should consider their tail risks. While Goldilocks prevails today, what are markets are pricing in terms of recession risk?

The Watchlist below is not exhaustive but includes a number of securities across asset classes that would typically be viewed as cyclical in nature. So which markets are pricing the Goldilocks scenario, and which are pricing elevated fears of a hard landing?

Again, this is not a definitive list of cyclical assets. Our Recession Watch Watchlist is available off-the-shelf, or create your own customised list in the Qi portal and, with one easy eyeball, you have the ability to quickly monitor where markets are pricing Goldilocks and where a potential Bust is gaining traction.

#macromadeeasy

We can add that to a list that includes ARKK and the MEME ETFs: both +1.5 std dev rich.

What about credit spreads themselves? US High Yield spreads are in a strong macro regime - model confidence is 86% and incredibly stable.

They now screen as 0.5 std dev or 18bp too tight versus prevailing macro conditions. Not a huge Valuation Gap but towards the tight end of recent ranges.

For now though macro momentum is supportive. Model value is trending tighter. Model value has moved from 483bp at the start of June to 437bp now. Until this turns wider, any FVG simply flags a market that is running ahead of fundamentals. Not an imminent reversal.

However, to the extent that credit spreads are fairly fully priced, that does in turn imply it's going to be increasingly hard for low quality equity plays to keep performing.

This is not yet a signal even with extended FVGs because of macro momentum. It is, however, an indicator that the risk-reward trade-off is becoming harder to chase the catch-up trade in high beta.

The Qi US High Yield credit basket is a long/short pair with strong tracking and less onerous carry dynamics. It has fallen 11% since early May and this HY spread tightening move. It is trackable on Bloomberg and tradeable via our partner Investment Banks.