By Bill Hornbarger, Chief Investment Officer
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Three Things to Watch
- It is a busy week on the economic calendar and most of the data is expected on the soft side. Durable goods (Monday) is expected to be down 4% month over month, while the ISM manufacturing survey is forecast to be under 50 for the fourth consecutive month indicating contraction. Two regional manufacturing surveys (Richmond and Dallas) are also expected to be soft. On Friday, the ISM services index is expected to slip slightly, from 55.2 to 54.5.
- There will be eight separate Fed appearances this week. Recent rhetoric from Fed members has remained hawkish, consistently indicating additional interest rate increases to come.
- We are close to the end of the fourth-quarter earnings season, but plenty of retailers report this week including Target, Lowe’s, Best Buy, Kroger, Costco, and Macy’s. Outside of retail, Norwegian Cruise lines, JM Smucker, Six Flags, Zoom, Dell, and Salesforce will report. With over 85% of the S&P 500 members having reported earnings, 68% posted positive surprises with an aggregate surprise just over 1%.
Three Things to Know
- The 2-Year US Treasury yield has moved up to 4.78%, its highest level since July 2007. A year ago this yield was at 1.54% and two years ago it was at 0.12%. (Source: Charlie Bilello)
- Global freight rates are down 84% from their 2021 peak. The Baltic Dry Freight Index (an index that measures the cost of transporting various raw materials such as steel) has fallen from an index level of 5,650 to a recent price of 883. It is often considered a leading indicator of economic activity. (Source: Bloomberg)
- If you convert $1 million into newly printed $100 bills, you will have a stack that reaches your chest. Perform the same exercise with $1 billion – this is getting exciting – and the stack reaches about 3⁄4 of a mile into the sky! Finally, imagine piling up $32 billion, the total of Berkshire’s 2012-21 federal income tax payments. Now the stack grows to more than 21 miles in height, about three times the level at which commercial airplanes usually cruise. (Source: Berkshire Hathaway)
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.