The Asset Guidance Group Monday Outlook for the Week Ahead Starting Monday April 3, 2023

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

A shortened week lies ahead, with U.S. markets closed Friday in observance of Good Friday. But the latest batch of U.S. jobs data will give investors plenty to consider, starting with JOLTS job openings on Tuesday, followed by ADP private payrolls on Wednesday, and most importantly the monthly government employment report on Friday. The U.S. economy is expected to have added another 240K jobs in March, further supporting the idea that interest rates will have to stay higher for longer despite recent financial stability concerns. This week delivers ISM PMIs, and the red-hot services sector has been adding to inflationary
pressures while manufacturing languishes. U.S. factory orders are also on the domestic calendar. Overseas, OPEC+ meets today and is unlikely to tweak its policy, sticking to production cuts enacted in November. Later today the Reserve Bank of Australia meets, with the possibility of a pause in the rate-hiking cycle after inflation slowed in February. Germany’s factory orders and industrial production highlight the European docket, while China’s Caixin PMI numbers are expected to show progressing economic momentum. [1]

Recapping Last Week

Concerns about the banking sector eased and inflation numbers moderated, lifting U.S. equities to solid gains for the week and first quarter. The S&P500 and Russell 2000 Indexes rose 3.5-4%, while the Nasdaq Composite added 3.4% and soared nearly 17% in Q1, its best performance since Q4 2020. All 11 S&P500 sectors finished positive, with energy, basic materials, and industrials leading the way. Crude oil jumped 9%+ as U.S. stockpiles unexpectedly fell to a two-year low while disruptions to Iraqi exports tightened global supply. U.S. Treasury yields
spiked last Monday after a buyer was found for Silicon Valley Bank’s assets before
leveling off the rest of the week. On the inflation front, prices softened in February,
with the Core PCE Index slowing to a 4.6% rise YoY from 4.7% the prior month. The data gives the FOMC a bit more flexibility in considering future interest rate adjustments, but the pace of disinflation remained agonizingly slow. In other news, U.S. consumer confidence ticked up in March despite the banking crisis.
Americans remained positive about employment opportunities, and jobless claims stayed historically low. U.S. home prices cooled for a seventh straight month in
January, while pending home sales increased for a third consecutive month in February to the highest levels since August. U.S. manufacturing improved slightly in March but remained in contraction, according to surveys in the Richmond and Chicago regions. Lastly, the U.S. trade balance widened in February as a drop in exports exceeded a decline in imports.  Internationally, Eurozone CPI tumbled to 6.9% YoY in March from 8.5% the prior month, largely due to a drop in energy costs. But core inflation reached a new record high of +5.7% YoY, pressuring on the
European Central Bank to raise rates further with wage growth at 5-6%. In China,
services sector PMI surged to 58.2 in March, a ten-year high, while manufacturing stayed in expansion at 51.9. Finally, Japan’s Tokyo Core CPI eased in March as utility bill subsidies kicked in, but demand-side pressures persisted when stripping
out food and energy prices.  [2]

Chart of the Week:

Notable price barriers were broken through to the upside on the weekly chart of the
PHLX Semiconductor Index (SOX). The index has risen to levels last seen in April 2022,
contributing strongly to the Nasdaq’s impressive first quarter. Prices may have room to rise even further, with the next potential technical resistance area near $3530. The MACD also moved higher, but with less momentum than the prior high at the end of January and might be an indicator worth watching to measure potential weakness below the surface. If the MACD starts dropping in the coming weeks, this indicator would form a bearish divergence, suggesting a stronger pull back may be looming. But for now, the longer-term trend appears to be pointing upwards. 

 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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