Weekly Market Review April 12, 2023
Equity and bond markets have generated positive returns thus far in 2023 amid mixed signals from economic data. The S&P 500 Index has returned +7.4% this year while the investment grade bond market has returned +4.1%. Notably, the tech rebound is driving equity markets in 2023 as demonstrated by the five largest stocks in the S&P 500: Apple (+27%), Microsoft (+22%), Amazon(+22%), NVIDIA(+85%), and Alphabet (+23%). (Source: YCharts)
On the economic front, three data points last week indicated a potential slowdown later this year. First, the strong labor market is showing signs of losing steam; the ADP private-payroll report showed an increase of 145,000 jobs in March, 100k jobs short of expectations, while job openings fell below 10 million for the first time in nearly two years. Second, manufacturing activity continued to contract according to the ISM Manufacturing Index, while the service sector's expansion came in below expectations. Third, the housing sector is softening amid high borrowing costs, as year-over-year home prices declined in February for the first time in 11 years. (Source: The Wall Street Journal)
Headlines of the U.S. dollar (USD) at-risk of losing its global reserve currency status have re-emerged in recent weeks, a narrative that pops up every few years. The USD is not immune to fluctuations, but its dominance in the global economy should be noted: 1) the USD makes up 58.4% of global reserves, 2) the dollar accounted for over 80% of global trade between 1999 and 2019, and 3) the U.S. dollar is backed by the largest and most liquid equity and bond markets globally. (Source: Edward Jones)
This week, we get a look at March inflation with the Consumer Price Index (CPI) on Wednesday and the Producer Price Index (PPI) on Thursday. On Friday, the focus shifts to retail sales, business inventories, and consumer sentiment.
Blueprint Numbers
MADE IN AMERICA - $108 billion was spent on manufacturing construction in 2022, the largest annual amount on record and nearly $25 billion more than any previous year. The resurgence in U.S. manufacturing has been driven by green-energy incentives and a growing concern of overreliance on the global supply chain. (Source: The Wall Street Journal)
THE MASTER'S PURSE - The 2023 Master's, the first of four major golf championships each year, took place over the weekend. The golfers were competing for a piece of the $18 million purse, an increase of $3 million from last year. The winner of the event, Jon Rahm, earned $3.24 million, while Phil Michelson and Brooks Koepka, who tied for second place, each won $1.6 million. (Source: Golf.com)
COMMERCIAL MORTGAGES ARE DUE - In the next few years, nearly half of the $2.9 trillion in commercial mortgages will come due in the face of higher borrowing rates. The sector is facing dwindling demand in a post-covid world as working-from-home has increased. Morgan Stanley estimates commercial property prices may fall as much as 40%. (Source: USA Today)
$1,000 CAR PAYMENT - New car buyers are increasingly paying more than $1,000 month in their monthly car payment. In 4Q 2020, only 6.7% of car buyers paid over $1,000/month for their car payment. In 4Q 2022, this increased to 15.7% of car buyers. (Source: Car and Driver)
The opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Stock investing includes risks, including fluctuating prices and loss of principal.
