I keep an electronic file that I titled “current trends”: There, along with a daily economic log and a weekly updated macro indicator file, is where I accumulate various topics and data points that offer clues as to where we are in the business cycle and, thus, influence our sector and regional allocation decisions.

For this week’s update I thought I’d highlight much of what currently sits in that file and translate (in italics) each item in terms of its signal to the market and economic growth. Here goes:

American workers are claiming a rising share of GDP. Both wages and benefits are hitting new cycle highs as a share of the economy. Sounds great, and it is, but understand that more expensive workers can be a real headwind for profit margins over time.

Three of America’s biggest banks recently warned that oil prices will create headwinds on Wall Street. Banks expect to build additional loan loss reserves if the oil outlook weakens from here. Forty-two North American oil companies have filed for bankruptcy since the beginning of 2015. Here’s from an interview with Jamie Dimon:

Dimon said the energy portfolio makes up just a small portion of JPMorgan’s balance sheet and many of the loans are backed by physical assets. That means banks can sell off assets to recover money if a company defaults on its loans.

“We’re not worried about the big oil companies. These are mostly the smaller ones that you’re talking,” Dimon said.

Paul Miller, a banking analyst at FBR, said oil loans don’t represent nearly the same threat to banks that mortgages did last decade. He also pointed out that banks have been forced to stockpile capital to help them absorb losses.

“The big banks might have 1% to 6% of exposure. That’s not going to kill them. This is not like 2006 or 2007,” Miller said.

Despite the turmoil, JPMorgan isn’t planning to run away from the oil patch.

“To the extent we can responsibly support clients, we’re going to. And if we lose a little bit more money because of it, so be it,” Dimon said.

In terms of the energy sector, the company failures are part and parcel to the price bottoming process. In terms of the banks, a 2008 scenario is not in the cards—and they are among the fundamentally cheapest stocks in the market. An improving economy, with its attendant higher interest rates (not to mention a bottoming in oil) could bode extremely well for investors in the sector going forward. We’re maintaining 15-20% exposure to financials in most of our client portfolios.

Underlying market breadth is extremely bullish! 80% of the stocks in the S&P 500 are trading above their 50-day moving averages. The stocks in seven of the ten major sectors have readings above 80%, while the only three with less, health care, financials and technology, have readings of 56%, 76% and 78% respectively. While there’s much more to consider, this is, again, an extremely bullish signal for the market.

Long-term trend channels have been broken in emerging markets: Up nearly 20% off their recent lows, emerging markets have broken above the trend line that has been firm resistance dating back to last May’s market peak. This is a bullish technical sign for our emerging markets exposure!

As of March 4th, the three worst performing sectors from last year’s peak—energy, industrials and materials—have moved into positive territory year-to-date. While I anticipate huge volatility in these areas going forward, their recent strength suggests that the market anticipates a better global economy going forward, as well as the reaching of some equilibrium in commodities.

The fourth quarter of last year saw increased spending on manufacturing and industrial equipment. This is a signal that there may at last be an increase in productivity going forward. This is what the market sorely needs, particularly when we consider the fact that labor costs are on the rise!

Ford F-series truck sales grew 9.9% year over year! The 60,697 was the most sold in any February dating back to 2006. Ford truck sales are considered an indicator of activity in the small business sector. This number says good things!

German industrial production at 6-year high! Way too soon to break out the bubbly, but in the face of Europe’s present headwinds this is a very hopeful development!

Hotel occupancy tracking best year ever: 2015 was the best year on record for hotels, and 2016 is tracking it perfectly thus far. Hard to think “recession” under such circumstances!

U.S. industrial production staged a broad-based pickup in January: Not to an extreme, but the readings beat expectations. The strength especially in consumer goods speaks to the underlying strength of the (consumer-driven) U.S. economy.

February’s jobs report showed a 555,000 person pickup in the labor force participation rate: The biggest one-month reading in over a year and the fifth consecutive increase—the longest streak during the present expansion. If this is indeed the start of a new trend, it speaks volumes for the U.S. economy! The one perceived negative being the potential that an increasing labor force could suppress wages, as there’ll be more competition for available jobs. To turn that around, however, a larger pool of workers is a boon to businesses and potentially offsets my concern over the desperate need for increased productivity.

Metals prices, across the board, have been quietly rising of late. Rising metals prices are an inevitable reality as producers shutter production and the global economy doesn’t spiral into the abyss. If the recent trend holds, the doomsayers’ case that low commodity prices are a harbinger of a global economy, well, spiraling into the abyss are going to have a tough time maintaining credibility. My contention from the start has been that low commodities prices do not contribute to recessions. In fact, they serve as stimulators as business and personal resources are freed up and allocated to productive uses. At the moment, it appears as though my (not original, but not [lately] popular) contention may be the one beginning to play out.

Short interest remains elevated. The March 11 update showed short interest (bets on stocks that their prices will fall) at the end of February (always a two-week lag) remains overall very high. This is somewhat surprising in that the recent rally has been credited largely to short covering. While denoting a high degree of pessimism,  the high level of short interest fuels contrarian optimism and suggests that, barring big negative surprises, the current rally may have more room to run.

According to the latest Bank of  America Fund Manager Survey, investor cash positions are at their highest level in 15 years and their overweight to equities is at its lowest percentage in 4. Of course this—in terms of liquidity, and investors getting caught with too little exposure during an upswing—would be a huge buy signal!

Transportation stocks bottomed well before the S&P 500: The weakness in transportation stocks last year was huge fodder for the doomsayers who characterized that weakness as an unequivocal sign that the global economy is on the verge of, if not already in, deep recession. Well, if the transportation sector is indeed a sign of economic strength, its bottoming several weeks prior to, and outperformance of, the broader market should be yet another indicator that things aren’t nearly as bad as some might have us believe…

There’s more, but I think you get that the general trend of late is markedly improving. Nonetheless, there remains major potential headwinds—central bank policy, Great Britain referendum, volatility in commodity markets and the U.S. political circus!!, for example—that will no doubt inspire huge volatility as we meander our way through the year. 

The good news, for those who fear bear markets, is found in Sir John Templeton’s timeless, and forever prescient, quote:

Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.

Here’s a quick look at the chart: