• The ISM Services PMI report points to robust service sector activity in February.
  • New orders grew at the fastest pace since 2021.
  • Companies sharply boosted hiring in February, indicating strength in the labor market.
  • Price pressures are easing, …

 

 

  • … which points to lower inflation ahead.

 

 

  • The inverted yield curve has been hinting at a recession for some time now.
  • Variant Perception’s model signals a sharp downturn.

 

 

  • Fiscal tightening is expected to be a drag on growth this year.
  • Morgan Stanley sees only one down quarter in 2023. Goldman is expecting zero down quarters this year.
  • According to CoreLogic, home prices in January of 2024 are projected to increase by 3% compared to the levels seen in January 2023.

 

 

  • The median listing price continues to climb.

 

 

  • Housing affordability remains near record lows.

 

 

  • New listings are down sharply from last year.

 

 

  • Spending by older Americans has been rising at a faster rate than that of the general population.
  • Credit card debt continues to rise.

 

 

  • Wholesale used automobile prices are rising again.
  • The February ADP private payrolls index topped expectations.
  • We are starting to see some pain in the construction sector.
  • Hotels and restaurants/bars continue to add jobs.
  • Professional and business services experienced a loss in payrolls for the first time since the COVID shock.
  • Factories continue to hire.
  • Small businesses have been shedding jobs for five months in a row.
  • Job openings also surprised to the upside, with labor demand remaining robust in January.
  • This is not the trend the Federal Reserve wants to see. There were 1.9 job openings per unemployed American. The labor market imbalances persist.
  • Layoffs remain below pre-COVID levels.
  • The Great Resignation is slowing, with the quits rate rolling over (but still above pre-COVID levels).
  • The full impact of Fed’s rate hikes on US industrial output is yet to be felt.

 

 

  • Mortgage applications remain at multi-year lows.
  • Initial jobless claims jumped last week. Is this the beginning of an upward trend in US unemployment?
  • The number of unemployment applications has now surpassed the average of 2018, 2019, and 2022 levels.

 

 

  • Continuing claims are now well above last year’s levels.
  • Employment growth tends to be strong just before recessions.

 

 

Market Data

 

  • How much have the 2023 earnings projections changed year-to-date?

 

 

  • Technology, media, and telecom (TMT) stocks accounted for roughly 40% of the US market cap at their recent peak, similar to the tech bubble in 2000.

 

 

  • A similar rotation out of TMT and into non-TMT stocks occurred over the past year. Repositioning may be temporary as the broader bear market takes hold.

 

 

  • The S&P 500 declined sharply this week, closing below its 200-day moving average.

 

 

Quote of the Week

 

“He who blames others has a long way to go on his journey.  He who blames himself is halfway there.  He who blames no one has arrived.”

– Chinese proverb

 

Picture of the Week

 

Spring Blossoms in Tokyo

 

 

 

All content is the opinion of Brian J. Decker