WEEK OF APRIL 10th-16th:

WEEK OF APRIL 10th-16th:

Market Indexes:

Market Commentary

Markets saw their fair share of volatility this week with CPI data on Wednesday and the beginning of earnings season on Friday, indices ultimately closed flat relative to last week’s close. However, now that earnings season is upon is, traders will be looking for news to spur indices out of the tight ranges they’ve been trading in recently.  Earnings season kicked off with major banks JP Morgan, Wells Fargo, Citigroup, and PNC Bank all announcing earnings on Friday.  By and large, earnings were quite strong for all four banks, which was not a total surprise as we saw a minor run on the regional banks earlier in the quarter, with the major money center banks being the beneficiaries.  We will be monitoring regional bank earnings in a few weeks to get a clearer picture of how the majority of banks are performing, not just the largest banks.  Over the next few weeks we will see a majority of S&P 500 companies announcing earnings and we will be writing a summary of each of our companies we hold as they are released.  Up this week are Lockheed Martin (LMT) on 4/18, and AT&T on 4/20. 

Economic Data

Wednesday: Core CPI Accelerates To +5.6% Y/Y, While Headline Slows To +5.0%. Weekly Retail Sales New Low +1.5% 

  • A bit of a tale of two narratives this morning on CPI with Headline CPI slowing and Core CPI re-accelerating
    • Headline CPI came in at +5.0% Y/Y for March, versus +6.0% in February -> back to May 2021 levels
      • On a M/M basis Headline slowed to +0.1% M/M, versus +0.4% in the prior month
    • Meanwhile, Core CPI (less food and energy) accelerated to +5.6% Y/Y in March, versus +5.5% in February
  • On a M/M basis Core was down slightly to +0.4%, versus +0.5% in the prior month
  • The major negative contributors, likely no surprise, were energy commodities -17.0% Y/Y, gasoline -17.4%, fuel oil -14.2%, and used cars -11.2%
    • The major positive contributors were transportation services at 13.9% Y/Y, shelter at +8.2% (contributed to 60% of the increase of Core), and food at +8.5%
      • Shelter may be finally topping coming in at +0.7% M/M (lowest since November 2022) and Rent at +0.5% M/M (lowest since March 2022)
    • The Fed Funds Futures market reduced odds of May hike by about 10bps, to ~66%, on this data. So, essentially the Fed likely remains on track for another hike .
  • Yesterday, U.S. Redbook Weekly Retail Sales hit a new post COVID low of +1.5% Y/Y (likely negative -3 – 4% on a volume basis)
  • Small businesses seemingly continue to struggle with the NFIB Small Business Index declining by 0.8 points in March to 90.1 -> 15th consecutive month below the 49-year average of 98
    • Small business owners expecting better business conditions in the next 6 months was net negative -47%
      • On the labor front, hiring plans hit their lowest level since 2020 in this survey . . .
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