By Bill Hornbarger, Chief Investment Officer
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Three Things to Watch
- Key events this week include the March Consumer Price Index (CPI) on Wednesday and Producer Price Index (PPI) on Thursday. Inflation has reaccelerated to start 2024, and U.S. Federal Reserve (Fed) expectations on rate cuts have been impacted. This week CPI is expected up 0.3% (month over month) and 3.4% (year over year), while core is expected to increase 3.4% and 3.7%, respectively. Those numbers, coupled with last week’s hotter-than-expected March jobs report, have pushed the expectation for the first rate cut into July.
- Additionally, market participants will be looking at the Fed’s March minutes for clues on the Fed’s thinking in terms of rate cuts. Multiple Fed officials have put forth that it is appropriate to wait until there is a clearer indication that inflation is slowing toward their 2% target before cutting rates. Recent strong data has pushed back the projected timing of those developments.
- First-quarter earnings season starts this week with Constellation Brands, Delta Airlines and three major banks: J.P. Morgan, Wells Fargo and Citigroup. According to Bloomberg, “A resilient economy and strong consumer demand are expected to fuel a rise in earnings growth for S&P 500 companies for a second straight quarter following three straight quarters of profit contraction.”
Three Things to Know
- Purdue is attempting to become the second team in history to earn a #1 seed in the NCAA men’s basketball tourney, lose in the first round to a #16 seed and win it all the following year. The 2019 Virginia Cavaliers were the first to accomplish this feat. (Source: SBNation)
- Inflation has officially been at 3% or higher for exactly three years. The average American is now paying nearly 40% more for groceries than what they were paying in 2019. Over 100 food items have seen inflation above 50% since 2019. (Source the Kobeissi Letter)
- Over the past 12 months, the U.S. Treasury issued a cumulative $21 trillion of T-bills, the most in history. During 2023, the government sold a record $23 trillion worth of Treasuries. Since the end of 2019, the total Treasury market has increased by more than 60% to $27 trillion. It is now ~6x larger than it was prior to the 2008 financial crisis. Meanwhile, total U.S. debt is currently rising by $1 trillion every 100 days. (Source the Kobeissi Letter)
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.