HK Weekly Recap & Analysis January 16th, 2023
The Week Ahead (January 16th – January 20th)
KEY ECONOMIC DATA RELEASES TO WATCH
MARKET RECAP FROM THE PREVIOUS WEEK
January 9, 2023
NYFed Unemployment and Inflation Expectations
In December, unemployment expectations fell compared to November. December's expected household income increase is 4.6%, the highest in the series' history. The expected increase in household spending in December falls to 5.9% from 6.9% in November.
December five-year ahead of expected inflation at 2.4% vs. November's 2.3%. December, one-year ahead, inflation is expected to be 5%, compared to 5.2% in November.
Fed’s Daly and Bostic speaking on inflation, job market, and rates.
Labor Market: Daly: In Q1, I expect the labor market to slow and inflation to come down. Wage declines are consistent with a slowing labor market. Labor supply and demand are becoming more balanced—unemployment to rise to 4.5%-4.6%.
Inflation: Daly: Inflation will not be reduced to 2% this year. Bostic: inflation can fall to about 3% this year, though it will take time for the Fed's policy change to play out. Services inflation has passed goods inflation as being the problem.
Rates: Daly: It is reasonable for rates to be 5%-5.25% at peak. Not going to wall off a 50 bps rate hike as unlikely without seeing CPI. Bostic: Rates will have to remain above 5% well into 2024. The data will guide the Fed on when to shift to a 25 bps hike.
Intraday Change for Indices:
SPY -0.64%
QQQ -0.11%
DIA -0.71%
IWM -0.63%
January 10, 2023
Microsoft is in talks to invest $10 billion into OpenAI, the ChatGPT creator valued at $29 billion. Microsoft would get 75% of the revenues until their investment is recouped. Then they would have 49% ownership in the company.
Coinbase lays off 20% of its workforce.
Fed's Bowman: Household balance sheets have remained solid, with low debt levels. Cryptocurrency activities can pose significant risks to consumers, businesses, and the broader financial system. Last Friday's US jobs report supported the labor market's strength.
House Republicans introduced a bill to abolish the IRS and a national-consumption tax to replace the existing federal income-tax scheme.
Goldman Sachs has begun to cut up to 3,200 jobs in one of its most extensive layoffs since the 2008 financial crisis.
Intraday Change for Indices:
SPY +0.86%
QQQ +1.24%
DIA +0.68%
IWM +1.60%
January 11, 2023
The FAA grounded all departing domestic flights to restore its Notice to Air Missions System. Flights resumed a few hours later after the systems were fixed.
FTX recovered $5 billion in cash, liquid crypto, and other investment securities.
Binance is planning a hiring spree of up to 30% in 2023.
Apple introduced Apple Business Connect, a free tool that allows businesses to claim their location place cards and customize how critical information appears to Apple users across all its apps.
Blackrock, the largest asset manager in the world with $10 trillion in assets, dismissed about 500 employees across the globe.
FTX gets approval to keep customer names secret for three months.
Twitter is looking into selling usernames by auction to generate revenue.
Intraday Change for Indices:
SPY +0.84%
QQQ +1.33%
DIA +0.40%
IWM +0.83%
January 12, 2023
CPI Data:
US CPI YoY Actual 6.5% (Forecast 6.5%, Previous 7.1%)
US Core CPI YoY Actual 5.7% (Forecast 5.7%, Previous 6.0%)
US CPI MoM Actual -0.1% (Forecast -0.1%, Previous 0.1%)
Jobless Claims:
US Initial Jobless Claims Actual 205k (Forecast 215k, Previous 204k)
US Continued Jobless Claims Actual 1.634M (Forecast 1.71M, Previous 1.69M)
Fed's Harker: The worst inflation spike is likely past now. It's time to switch to 25 basis point increments for future Fed rate increases. I expect the Fed to get rates just over 5%, then hold.
Fed's Bullard: Even after today's CPI figures, inflation remains exceptionally high.
It is still far above the Fed's target but decreasing.
The Fed's policy has kept inflation expectations in check. I expect inflation to fall to 2%; our policy has been sound. The most likely scenario is that inflation will remain above 2%, necessitating higher policy rates for extended periods. Over the last three months, recession risks have subsided.
Fed's Barkin: Inflation is more likely to persist than a simple drop to 2%. To maintain credibility, the Fed should meet its 2% inflation target.
Wage pressures will persist through the first quarter, but the labor market appears to be easing.
Sam Bankman-Fried claims innocence and says he did not steal money or stash funds. Blamed the collapse of FTX on the broad crypto market and not hedging investments.
Intraday Change for Indices:
SPY +.07%
QQQ +0.33%
DIA 0.33%
IWM +1.23%
January 13, 2023
US Import Prices MoM Actual 0.4% (Forecast -0.9%, Previous -0.6%)
US Export Prices MoM Actual -2.6% (Forecast -0.7%, Previous -0.3%)
Nancy Pelosi booked nearly $2.5 million in stock losses. The most significant losses came from Tesla, Salesforce, and PayPal.
Tesla has cut its EV prices by up to 20% worldwide to bolster demand.
The University of Michigan Inflation Expectations
UMich 1 Yr Inflation Prelim Actual 4% (Forecast 4.3%, Previous 4.4%)
UMIch 5 Yr Inflation Prelim Actual 3% (Forecast 2.9%, Previous 2.9%)
The University of Michigan Consumer Sentiment
US Treasury Secretary Yellen: The Treasury will use extraordinary measures on the debt limit. Cash and exceptional efforts to stay within the debt limit will likely be exhausted before early June. The debt ceiling is expected to be reached on January 19th.
Crypto.com is laying off 20% of its workforce, citing the collapse of FTX damaging industry trust.
Intraday Change for Indices:
SPY +1.24%
QQQ +1.62%
DIA +1.14%
IWM +1.38%
THE WEEK AHEAD & EARNINGS
Monday – 01/16/2023
None scheduled. Martin Luther King Jr. Day.
AM Earnings: United Microelectronics Corporation (UMC)
PM Earnings: None scheduled.
Tuesday – 01/17/2023
Empire state manufacturing index - 8:30 AM ET
AM Earnings: Morgan Stanley (MS), Goldman Sachs Group (GS), Citizens Financial Group (CFG), New Oriental Education & Technology Group (EDU), FB Financial Corp (FBK), Silvergate Capital (SI), Guaranty Bancshares (GNTY), Signature Bank (SBNY)
PM Earnings: United Airlines (UAL), Interactive Brokers Group (IBKR), Pinnacle Financial Partners (PNFP), Hancock Whitney Corp (HWC), United Community Banks (UCBI), Fulton Financial Corporation (FULT), Progressive Software Corp (PRGS)
Wednesday – 01/18/2023
Retail sales - 8:30 AM ET
Retail sales ex motor vehicles - 8:30 AM ET
Producer price index, final demand - 8:30 AM ET
Industrial production - 9:15 AM ET
Capacity utilization - 9:15 AM ET
NAHB home builders' index - 10 AM ET
Business inventories (revision) - 10 AM ET
Beige Book - 2 PM ET
AM Earnings: Charles Schwab Corp (SCHW), JB Hunt Transport Service (JBHT), PNC Financial Services (PNC), Prologis (PLD)
PM Earnings: Discover Financial Services (DFS), First Horizon Corp (FHN), Alcoa Corp (AA), Wintrust Financial Corp (WTFC), H B Fuller (FUL), Texas Capital Bancshares (TCBI), Eagle Bancorp (EGBN)
Thursday – 01/19/2023
Initial jobless claims - 8:30 AM ET
Continuing jobless claims - 8:30 AM ET
Building permits (SAAR) - 8:30 AM ET
Housing starts (SAAR) - 8:30 AM ET
Philadelphia Fed manufacturing index - 8:30 AM ET
Fed Vice Chair Lael Brainard speaks - 1:15 PM ET
AM Earnings: Comerica (CMA), Fastenal (FAST), Fifth Third Bancorp (FITB), KeyCorp (KEY), M&T Bank Corp (MTB), Northern Trust Corp (NTRS), Procter & Gamble (PG), Truist Financial Corp (TFC), TAL Education Group (TAL), American Airline (AAL)
PM Earnings: Netflix (NFLX), PPG Industries (PPG), SVB Financial Group (SIVB), Concentrix Corp (CNXC), Bank OZK (OZK), Independent Bank (INDB), Banner Corp (BANR)
Friday – 01/20/2023
Existing home sales (SAAR) - 10 AM ET
Fed Gov. Christopher Waller speaks at Council on Foreign Relations - 1 PM ET
AM Earnings: Ally Financial (ALLY), Ericsson (ERIC), Huntington Bancshares (HBAN), Regions Financials (RF), Sandstorm Gold (SAND), SLB (SLB), State Street Corp (STT)
