What to Watch This Earnings Season
Earnings will be key to the path for stocks the rest of the year given that we believe valuation expansion will be tough to come by with higher interest rates and stubbornly high inflation.
Which economic components could help release inflation pressures?
Inflation in March was mostly driven by categories already reverting in April. Still, the cool down period could be painfully slow. Here are the categories that will likely lead the way.
April 1st employment report was no joke: the labor market is tightening
The U.S. economy added 431,000 jobs in March and February job estimates were revised higher, pushing the 3 month average gain to 562,000. Unemployment ticked down to 3.6 percent, indicating a tightening labor market.
Ready, Set, Rate Hike
The Federal Reserve meets this week and in all likelihood will raise short-term interest rates for the first time since emergency levels of monetary accommodation were provided to markets after the COVID-19 shutdowns.
Gas Drives Headline Inflation To 40-Year High: Are We Near The Peak Yet?
The latest CPI numbers came in around consensus but showed a big 6.6% month-over-month spike in gasoline prices. The longer the Russia-Ukraine war and related commodity crunch continues the more likely headline inflation in March will be over 8% before coming down.
Downshift in U.S. Market Growth But Still Above Trend
We currently expect the U.S. economy to grow 3.7% in 2022. That is down from the previous 4-4.5% range we predicted but still above trend.
How Soon Are Rate Hikes Coming?
With inflationary pressures running higher than most central bankers are comfortable with, calls for interest rate hikes have become louder.
Fed News and Views—FOMC Meeting Minutes Released
The Federal Reserve released the meeting minutes from its January FOMC meeting and noted inflation pressures were still too high.
Federal Reserve Meeting Recap: Powell Pivot Confirmed
The Federal Reserve ended its two-day Federal Open Market Committee meeting yesterday and there were some notable shifts to monetary policy, although these shifts were largely expected by markets.
Outlook 2022: Passing the Baton
Fiscal and monetary policy played big roles in the economic recovery in 2021, but we see 2022 playing out as a handoff—from stimulus bridging a pandemic recovery to an economy growing firmly on its own.