By Bill Hornbarger, Chief Investment Officer
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Three Things to Watch
- This week marks the beginning of first-quarter earnings season. Big banks and other financials lead off with JP Morgan, Wells Fargo, Morgan Stanley, Goldman Sachs, and BlackRock among others on deck. The market will also pay close attention to Delta Airline’s earnings and, in particular, forward guidance on booking activity.
- The big economic report to keep an eye on will be the release of consumer prices (CPI) on Tuesday. CPI is expected to be up 8.4% on a year-over-year basis with core inflation (ex-food and energy) forecast to be 6.6% higher than a year ago. Both of those would represent an acceleration from the previous month. March retail sales are set to be reported on Thursday, with the forecast for a flat reading ex-autos and gas.
- Multiple Federal Reserve speakers will be on the tape this week and investors will continue to look for clues on the pace and timing of additional interest rate increases and the disposition of the Fed’s bond holdings. Fed Governor Lael Brainerd speaks Tuesday. Last week, her hawkish comments helped push bond yields to the highest levels since early 2019.
Three Things to Know
- The top 10 stocks in the S&P 500 remain above 30% of the market capitalization (30.7% as of March 31) but the earnings contribution of those 10 stocks is declining (23.8% currently, down from more than 32% last year). (Source: The Daily Shot)
- Economists surveyed by The Wall Street Journal this month on average put the probability of the economy being in recession sometime in the next 12 months at 28%, up from 18% in January and just 13% a year ago. (Source: The Wall Street Journal)
- This is the longest U.S. bond market drawdown in history. It is currently at 20 months with the Bloomberg Barclays U.S. Aggregate down 9.6% over that time frame. (Source: Bloomberg)
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.