Weekly Market Update with Brian Ransom 14 April 2023
Welcome to the weekly market update from Signature Wealth Management. I’m Brian Ransom, Research Director from Signature Wealth and here’s what happened in the market this week.
The market continues to remain remarkably resilient despite the tough headlines regarding bank failures over the last 2 months. However, immediate threats to a recession have eased with strong quarterly performance from large banks, easing inflation, and no further banking failures. Thus, the market continues to trade in a sideways trading pattern and threatens to breakout above said trading pattern in the near future.
In the news this week, JPMorgan reported solid quarterly earnings, kicking off this quarter’s earning season. Retail sales fell 1% in March indicating lower spending from consumers. And inflation eased for the month of March to 5%, the lowest level in 2 years.
Doing a deeper dive on that inflation reading, here in the red is 5% total CPI reading. A big driver of that decline was a large drop in energy prices. This drop does not include a production change out of OPEC that occurred late in the month so the energy drop may be a little misleading. Core CPI items remained elevated for the month as well.
Looking at Sticky-CPI, this is the first time since inflation began that Stick-CPI fell. As a reminder, Sticky-CPI reflects price increases in products that tend to be permanent. Sticky-CPI is a reasonable leading indicator of future inflation. In this case, Sticky-CPI fell from 6.4% to 6.3%, a good sign of easing inflation tensions.
Despite the easing inflation, expectations for future rate hikes increased over the last month. Currently, the market is predicting a 70% chance of a 25 basis point increase for the May Fed meeting. A month ago, when the first bank failures hit the market, those odds were 10%. With the positive earnings call out of JPMorgan this morning, I suspect these odds of a 25 basis point hike will increase further.
This Weekly Market update is meant to be an enticing appetizer for market and economic knowledge. For a heartier serving, please check out our podcast, “Up and to the Right” on all your favorite podcasting apps. And for the full course meal, check out our website at signaturewmg.com. As always, don’t forget to smash that subscribe button!
1.FactSet Research Systems. (n.d.). S&P 500 (Interactive Charts). Retrieved April 14, 2023, from FactSet Database.
2.Bureau of Labor Statistics. 12-month percentage change, Consumer Price Index, selected categories. Updated April 12, 2023. Retrieved from https://www.bls.gov/cpi/
3.Federal Reserve Bank of Atlanta. Sticky-Price CPI. Updated April 12, 2023. Retrieved from https://www.atlantafed.org/research/inflationproject/stickyprice
4.FactSet Research Systems. (n.d.). Policy Rate Tracker (Markets). Retrieved April 14, 2023, from FactSet Database.
Signature Wealth Management Group is registered as an investment adviser with the SEC. Signature Wealth only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements.
Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change.
Information contained herein does not involve the rendering of personalized investment advice, but is limited to the dissemination of general information.
The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
The S&P 500® Equal Weight Index (EWI) is the equal-weight version of the widely-used S&P 500. The index includes the same constituents as the capitalization weighted S&P 500, but each company in the S&P 500 EWI is allocated a fixed weight - or 0.2% of the index total at each quarterly rebalance.
The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them. Changes in the CPI are used to assess price changes associated with the cost of living.
Past performance does not guarantee future results. Consult your financial professional before making any investment decision.
Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. The use of words such as “will”, “may”, “could”, “should”, and “would”, as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements.
Information is not an offer to buy or sell, or a solicitation of any offer to buy or sell the securities mentioned herein.
The S&P U.S. Style Indices measure the performance of U.S. equities fully or partially categorized as either growth or value stocks, as determined by Style Scores for each security. The Style series is weighted by float-adjusted market capitalization (FMC), and the Pure Style index series is weighted by Style Score subject to the rules described in Index Construction.
All information presented prior to an index’s Launch Date is hypothetical (back-tested), not actual performance. The Index returns shown do not represent the results of actual trading of investable assets/securities. S&P Dow Jones Indices LLC maintains the Index and calculates the Index levels and performance shown or discussed, but does not manage actual assets. Please refer to the methodology paper for the Index, available at www.spdji.com for more details about the index, including the manner in which it is rebalanced, the timing of such rebalancing, criteria for additions and deletions, as well as all index calculations.