Markets: The hawkish tone from the Fed Chair last week sent Markets lower. The Fed will entertain raising their interest rate 50 basis-points (1/2%) in their meeting a couple of weeks from now (not a surprise). What would be a surprise is a 75 basis-points rate hike. As the Fed is attempting to tame Inflation, maybe St. Louis Fed President Jim Bullard was right (he called for bigger hikes a couple of months ago).
S&P roller coaster last week: down a fraction, up significantly, down a fraction, down a lot, and down significantly.
10-year watch: It continues its march toward 3%. We started the year with the 10-year at 1.51%. The 10-year is at 2.90%. The 5-year is at 2.94%. That’s called an “inversion”, meaning the shorter time rate is higher than the longer time rate (generally not a good thing). Will it stay that way, or get back to more of a normal spread?
Housing: Starts increased +0.3% in March and are up +3.9% YOY. Existing home sales dropped -2.7% in March and are down -4.5% YOY.
Jobless claims: The weekly number came in at 184,000. The four-week average is 177,000.
Radio: Bill and I were off last Friday. You can normally hear us most Friday mornings at 6:38a, 7:38a, and 8:38a on 1100AM.
Focus #1 of the week: It’s been volatile and ugly in the Markets this year. A couple of stocks have been pretty much holding things up: Apple and Microsoft. Both report this week: Microsoft on Tuesday; Apple on Thursday. Things to watch: First, how did their quarters go? Second, what is their guidance about the coming quarter(s)? And how will Markets respond to their news? If, for example, Apple does well and the stock still sells off… well, that would be an important “tell”.
Focus #2: It will come at the end of the week when we get another Inflation update. The metric the Federal Reserve watches, the Personal Consumption and Expenditures index (PCE), gets updated early Friday morning. The prior read came in at 6.4%, the highest inflation read for this index in 40 years. The consensus is the PCE will rise up to 6.8%.
Earnings: It’s an important week. Some of the companies reporting: Alphabet, Amazon, Amgen, Apple, Boeing, Caterpillar, Chevron, Coca-Cola, Eli Lilly, Exxon Mobil, Ford, General Dynamics, GE, GM, Hershey, Intel, Kraft Heinz, Mastercard, McDonald’s, Merck, Microsoft, PepsiCo, Sherwin Williams, Visa, and Whirlpool.
Indicator focus: Durable goods, new home sales (Tue); the first read on Q1 GDP, jobless claims (Thu); and the PCE update (Fri).