By Bill Hornbarger, Chief Investment Officer
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Three Things to Watch
- The latest updates on inflation will be received on Wednesday and Thursday with the release of consumer (CPI) and producer (PPI) price indexes. Bloomberg forecasts CPI to fall from 4% to 3.1% and the core to decline from 5.3% to 5%. Thursday’s PPI is expected to clock in at 0.4% with core at 2.6%. CPI hasn’t come in below 4% since March of 2021. This week’s inflation data has the potential to change the narrative surrounding monetary policy, with two additional interest rate increases currently expected.
- The second quarter earnings season starts this week with the major banks including JP Morgan Chase, Wells Fargo, and Citigroup first up. According to Seeking Alpha, there have been 62 negative EPS preannouncements issued by S&P 500 corporations compared to 39 positives, which the London Stock Exchange Group computes as an N/P ratio of 1.6 for the S&P 500 Index. This compares to a long-term average of 2.5 and prior four-quarter average of 2.0.
- On Wednesday, the Fed will also release the Beige Book report of regional business conditions, which coupled with eight Fed speakers, should provide important clues on the impact of the Fed’s actions to date.
Three Things to Know
- After a strong first half for the equity markets, Wall Street strategists are cautious for the send half, with their most bearish forecast/outlook on record. (Source: Bloomberg)
- This week the two-year Treasury note yield climbed above 5% for the first time since 2007. (Source: Benjamin F. Edwards)
- Crude oil is down more than 10.5% year-to-date, and over 23.5% the past twelve months. (Source: Conway)
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.