By Bill Hornbarger, Chief Investment Officer
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Three Things to Watch
- There are two very important pieces of data out this week that will help shape U.S. Federal Reserve (Fed) expectations as we head into the first Fed meeting of 2024 next week. Fourth-quarter GDP will be released on Thursday and is expected to show that the economy decelerated at the end of last year. The Bloomberg consensus forecast for GDP is 2%, with other surveys showing growth as low as 1.7%. The Atlanta Fed GDPNow forecast is 2.4%, and third-quarter GDP was 4.9%. A consensus reading would be the slowest growth since the second quarter of 2022 and increase fears of a 2024 slowdown/recession.
- On Friday, the Fed’s favorite inflation measure, the core Personal Consumption Expenditures Price Index, is expected to show a 3% year-over-year change. Core inflation continues to trend toward the Fed’s 2% goal but isn’t there yet. A reading of 3% or higher should result in some repricing of Fed expectations, pushing the thought of an interest rate cut later into the year.
- Fourth-quarter earnings season kicks into high gear with Tesla, Netflix and Visa all out with earnings. Of the 52 S&P 500 constituents that have reported to date, 45 (87%) have posted positive surprises.
Three Things to Know
- The S&P 500 is now 11% higher than where it was when the Fed started hiking rates in March 2022. (Source: @charliebilello)
- Shipping through the Suez Canal, linking Europe to Asia, has also come to a near standstill as Iranian-backed Houthi militants in Yemen escalate attacks on Red Sea cargo ships. Suez Canal (North>South) container ship crossings have fallen from 67 in mid-November to six currently (seven-day rolling total). (Source: Time, Bloomberg)
- The lowest temperature ever recorded in the United Staes was negative 80 degrees Fahrenheit in Prospect Creek, Alaska, in 1971. All but one of the 50 states (Hawaii) have documented a temperature below zero. The world record for the lowest temperature recorded is -128.6 degrees Fahrenheit, according to the World Meteorological Organization. The temperature was recorded on July 21, 1983, in Vostok, Antarctica, and confirmed by the Arctic and Antarctic Research Institute in Russia. (Source: USA Today, KDFW/Fox 4-Dallas)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.