Three Things to Know & Watch

Aug 7, 2023

By Bill Hornbarger, Chief Investment Officer
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Three Things to Watch

  • On the economic front, inflation data will take center stage with July CPI and PPI to be released Thursday and Friday, respectively. Overall, CPI is expected up 0.2% month-over-month and the year-over-year change is forecast to increase from 3% to 3.3%. The risk is that rising gas and oil prices in July could lead to an even hotter number and impacting inflation in August and September. Core CPI is expected unchanged at 4.8%, well above the Fed’s comfort zone and heavily influenced by services.
  • Earnings season is almost over although several high-profile names will report this week, including United Parcel Service, Disney and Alibaba. According to Seeking Alpha, just under 80% of S&P 500 firms have beaten second-quarter consensus EPS estimates, while only 59% of firms have beaten revenue expectations. That current percentage of revenue beats is the lowest level in three years.
  • The Treasury will conduct the quarterly refunding this week, issuing 3- and 10-yeer notes as well as 30-year bonds against the backdrop of rising yields. The auctions will total $103 billion as the Treasury intends to gradually increase auction sizes to meet intermediate- to long-term borrowing needs. Last week, the 10-year note yield reached 4.19% (the highest since last October) before ending the week at 4.04%.

Three Things to Know

  • Fitch downgraded its credit rating for the U.S. government, from AAA to AA+, two months after the debt ceiling crisis was resolved last Tuesday. The first and only other time the U.S. has faced a credit downgrade was in 2011, when S&P lowered its rating from AAA, meaning “outstanding,” to AA+, or “excellent.“ In both cases, the moves followed debt-ceiling standoffs and Fitch cited, “there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters.” (Source CNBC)
  • On Aug. 6, 1945, an American B-29 bomber dubbed Enola Gay dropped an atomic bomb on the Japanese city of Hiroshima. It was the first time a nuclear weapon had been deployed in warfare and the bomb immediately killed 80,000 people. Tens of thousands more would later die of radiation poisoning. Three days later, another atomic bomb was dropped on the Japanese city Nagasaki, instantly killing an additional 40,000 people. The most destructive World War II bombing attack on Japan was neither Hiroshima nor Nagasaki. Operation Meetinghouse, the U.S. firebombing of Tokyo on March 9,1945, is considered the deadliest bombing raid in history. A napalm attack carried out by 334 B-29 bombers, Meetinghouse killed more than 100,000 people. (Source: History Hit)
  • Babe Ruth hit 6.3% of the league’s HR in 1921, which is the equivalent of hitting 309 HR in 2022. (Source: Baseball History Nut)


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.