Inflation Continues to Moderate, Fed Predicts Recession (April 14 Market Recap)

Inflation Continues to Moderate, Fed Predicts Recession (April 14 Market Recap)

Indices 

• Dow 33,886, +401 or +1.2%. 
• Nasdaq 12,1230 +36 or +0.30%. 
• S&P 4,137, +32 or +0.78%. 
• USD10Y 3.522% +23.4bp or +7.1%. 
• WTI Crude $82.68 bbl, +$2.22 or +2.76%.

Inflation Continues to Moderate 

It was a great week of economic data if one was looking for evidence of waning inflation: the monthly Consumer Price Index was lower than expected and that drove a larger move downward for the year over year number (+5% vs last month’s +5.6%), the monthly Producer Price Index was also lower than expected which also drove the yearly number significantly lower (+2.7% vs +4.9% last month). Retail Sales also declined much more than expected, down –1% last month vs –0.5% expected. All in all, the markets should have rallied on the data this week but for the release of the minutes of the last Federal Reserve meeting. 

Fed Predicts Recession 

The release of the minutes from the Fed’s last meeting on March 22 muted what should have been a solid week of market gains. Members of the committee predicted that a recession would occur later this year due to the banking crises and what they assumed would be the resulting tightening of credit. For the year they predicted only +0.4% GDP growth which assumes negative GDP for the balance of the year as the first quarter estimate is +2.5%. 

Next Week 

Next week the economic calendar takes a back seat to earnings season. Among the highlights; Netflix, Tesla, and Proctor and Gamble. 

Economic Calendar 

• Monday – April Empire State Manufacturing. Earnings: Charles Schwab (SCHW). 
• Tuesday – N/A. Earnings: Netflix (NFLX), Bank of America (BAC), Goldman Sachs (GS). 
• Wednesday – Fed Beige Book. Earnings: Tesla (TSLA), IBM (IBM), Lam Research (LRCX). 
• Thursday – Initial Jobless Claims, April Philly Fed. Earnings: American Express (AXP), Taiwan Semiconductor (TSM). 
• Friday – April S&P U.S. Manufacturing and Services PMI. Earnings: Proctor and Gamble (PG).

If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review. 

April 14 Daily Trading Recap… 

Monday – Dow +101 to 33,586 Nasdaq -3 to 12,084 S&P +4 to 4,109, USD10Y +12.7bp to 3.415%. 

• Six of eleven S&P sectors traded higher today, led by Industrials, Energy, and Materials. 

Tuesday – Dow +98 to 33,684, Nasdaq –52 to 12,031 S&P +0 to 4,108, USD10Y +1.9bp to 3.434%. 

• Nine of eleven S&P sectors traded higher, led by Energy, Financials, and Materials. 

Wednesday – Dow –38 to 33,646, Nasdaq –102 to 11,929, S&P -17 to 4,091, USD10Y -1.3bp to 3.421%. 

• Seven of eleven S&P sectors traded down today, led lower by Consumer Discretionary, Communication Services, and Technology. 
• March Headline Month over Month (MoM) CPI was a great number at +0.1% vs +0.2% expected and vs last month’s +0.4%. That trimmed the Year over Year number (YoY) to +5.0% vs +5.1% expected and last month’s +5.6% print. 
• March Core MoM CPI was in line at +0.4% vs last month’s +0.5% print. YoY the number ticked up to +5.6% as expected and vs last month’s +5.5% print. 
• Markets should have rallied on the inflation report but for the release of the FOMC minutes which revealed that the Fed expects the March banking crisis to cause a recession later in the year. 

Thursday – Dow +383 to 34,029, Nasdaq +236 to 12,1668 S&P +51 to 4,1460 USD10Y +3.1bp to 3.452%. 

• Ten of eleven S&P sectors traded higher today, led by Communication Services, Consumer Discretionary, and Technology. 
• Jobless claims rose again to 239,000 vs the 232,000 forecast and last week’s unrevised print of 228,000.  
• March Producer Price Index fell precipitously, -0.5% MoM vs expectations of +0.0%. That resulted in the YoY number falling to +2.7% vs last month’s +4.9% print. 
• Earnings: Delta Air (DAL) lost more money than expected but forecasted a bigger profit for the balance of the year.  

Friday – Dow –143 to 33,886, Nasdaq -42 to 12,123 S&P -8 to 4,137 USD10Y +7.0bp to 3.522%. 

• Seven of eleven S&P sectors traded down today, led lower by Real Estate, Utilities, and Healthcare. 
• March Retail Sales were worse than expected at –1.0% vs –0.5% and –0.2% last month. 
• April Consumer Sentiment was better than expected at 63.5 vs 62 expected and last month’s 62 print. 
• Earnings: JPMorgan Chase (JPM) crushed their earnings and revenue expectations and boosted their guidance. Citibank (C) crushed their numbers as well. PNC Bank (PNC) beat earnings but slightly missed revenue expectations. Wells Fargo (WFC) beat both earnings and revenue expectations. BlackRock (BLK) beat earnings and met revenue expectations.

If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review. 

Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ETHE, GBTC, and TSLA.