The Asset Guidance Group Monday Outlook for the Week Ahead Starting Monday April 24, 2023

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Here’s The Asset Guidance Group Outlook for the Week Ahead… 

A busy week awaits with the first look at Q1 GDP numbers, inflation updates, Japan’s central bank meeting, and earnings reports. In the U.S., economic growth is expected to slow to around 2% from 2.6% the prior quarter in Thursday’s report as falling retail sales and the banking sector turmoil weighed. On Friday, a slew of key U.S. inflation data arrives,  including the Core PCE Price and Employment Cost
Indexes, along with personal income and spending figures. These are some of the last puzzle pieces to fit in before the Fed meeting on May 2, with fed fund futures currently reflecting an 85% probability of a 25bps hike. It’s also a big week for corporate earnings, with releases scheduled for technology giants Microsoft,
Amazon, Meta, Alphabet, and Intel. Investors will be paying attention not only to top and bottom-line results but also any additional layoff announcements. Other
U.S. events of note include consumer confidence, new and pending home sales, and durable goods orders. Overseas, the first meeting for Bank of Japan Governor
Ueda convenes late Thursday night, and no surprises are anticipated even as core
consumer inflation sits uncomfortably at 40-year highs. Finally, Germany will kick off the first glimpses of Q1 GDP and April CPI for the Eurozone on Friday. [1]

Recapping Last Week

U.S. equities ended the week little changed after mixed corporate earnings results
and economic data that pointed to a likely rate hike in May. The S&P500 Index fell
0.1%, while the Nasdaq Composite slid 0.4% and the Russell 2000 gained 0.6%. S&P500 sector performance was split, with losses in communications and energy balanced by gains in consumer staples and real estate. Crude oil slumped 6% after falling below a key technical support (see tweet here). U.S. Treasury yields rose modestly after April global manufacturing PMIs moved back into expansion, while services rebounded from the prior month’s decline. Commentary from FOMC members echoed a common theme: inflation is still too high, and another interest rate increase is likely. In the U.S., April’s flash manufacturing PMI suggested a pickup in demand, but that along with a strong services sector rekindled price pressure concerns. Regional manufacturing reports conflicted, with a surge in new orders for New York while Philadelphia contracted for an eighth straight month. Existing home sales fell 2.4% in March as mortgage rates jumped, while an increase in new construction offered hope for the spring selling season. U.S. unemployment claims increased slightly to 245K, hinting at only gradual slowing of a still robust labor market. While U.S. corporate earnings have thus far not revealed any signs of alarm, results to date have underwhelmed investors, with the largest technology companies yet to report. In international news, China’s Q1 GDP expanded by 4.5%, the best growth in a year and well above forecasts as retail sales soared 10.6% in March. UK consumer inflation stayed in double-digits in March, further denting retail sales and increasing the
likelihood of another 25bps rate hike at the Bank of England’s May 11 meeting. In Europe, services activity continued to far outpace the slumping manufacturing
sector, likely exacerbating wage pressures and core inflation. Investor sentiment fell across the continent as credit conditions tightened. [2]

Chart of the Week:

International stocks have outpaced U.S. equities since the October lows. The MSCI
EAFE Index (MXEA) tracks 21 international developed markets throughout Europe
and Asia. It just reached another 52-week high and has posted a 32% gain since last
fall, versus 18% for the S&P500. The outperformance has been spurred on by the U.S. dollar’s decline, since earnings in foreign currencies go further against a weak dollar. Although the trend has been mostly up, there are some warning signs. The MACD has just established its second consecutive bearish  divergence, which can occur
when a trend is running out of strength. The MACD lines crossing below zero and price breaking the recent lows near $1,965 would indicate a technical trend reversal. However, with the Fed potentially near the end of its hiking cycle, dollar weakness may persist and continue to lift international equities, invalidating the divergences. 

 Click here to view chart. [3]

Sources: [1] [2] [3] tdainstitutional.com tdainstitutional.com; Any performance data reported by Asset Guidance Group, LLC has been grouped and reported by kwanti.com, imported from TDAmeritrade Institutional, Risk categories as scored by Grable-Lytton test and grouped by like risk tolerance levels; NOTE: individual account performance grouped solely by model classification type in terms of risk tolerance. Individual portfolios include equivalent equities exposures via like models, but many may hold additional investments like structured notes, fixed income investments such as CDs, bonds, and other individually preferred securities. 1-Week risk score denotes overall performance of all AGG client portfolios grouped together by like-risk tolerance scores not by identical investment allocations; [4] [5] Macro Monday (tdainstitutional.com);

*All other Asset Guidance Group analysis, www.stockcharts.com; All index- and returns-data from Yahoo Finance; news from Reuters, Barron’s, Wall St. Journal, Bloomberg.com, ft.com, guggenheimpartners.com, zerohedge.com, ritholtz.com, markit.com, financialpost.com, Eurostat,0020Statistics Canada, Yahoo! Finance, stocksandnews.com, marketwatch.com, wantchinatimes.com, BBC, 361capital.com, pensionpartners.com, cnbc.com, FactSet; Chart from Indeed’s Hiring Lab.

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.

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