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

U.S. markets were closed Monday in observance of President’s Day, but a busy week
lies ahead, starting with Tuesday’s release of global flash PMI figures. In the U.S.,
investors will focus on Wednesday’s FOMC minutes, Friday’s Core PCE Price Index,
and a few key earnings reports sprinkled throughout the week. Comments last
week from two non-voting FOMC members rattled equity markets, so the minutes
from the Fed’s last meeting will be scrutinized to see if any other members favored
a larger rate hike. The recent sharp fall in the Fed’s preferred inflation indicator,
from 5.2% in September to 4.4% in December, has buoyed the disinflation
narrative. But another significant reduction may be hard pressed given January’s
blockbuster jobs report and strong economic data. Earnings results from major
retailers Walmart and Home Depot, along with technology bellwether Nvidia, will
test the strength of this year’s stock rally. Other U.S. events of note include the
second reading of Q4 GDP, new home sales, and personal income and spending
numbers. Consumer inflation in Japan and Canada highlight the international
calendar, along with economic sentiment releases in the Eurozone. [1]

Recapping Last Week

An uptick in monthly inflation data versus December and concerns about higher
interest rates left U.S. equities mixed for the week. The S&P500 Index slipped 0.3%;
the Nasdaq Composite added 0.6%, and the Russell 2000 rose nearly 1.5%. Six of 11
S&P500 sectors retreated, with energy diving 6%+ as a rising U.S. dollar sent crude
oil prices tumbling to $75 per barrel. U.S. Treasury yields rose across the curve,
boosted by hawkish Fed speak and a resilient economy in the face of high prices. U.S.
CPI rose 0.5% MoM in January, while producer prices jumped 0.7%, both above
estimates. Yearly increases ticked lower from the prior month, just not at the pace
that the Fed and consumers would like to see. U.S. retail sales were strong in January,
advancing 3% MoM as shoppers persevered despite inflation pressures. Consumer
debt reached a new record at the end of 2022, something to keep an eye on as
delinquencies rose but remained at historically low levels. February’s manufacturing
activity slumped in the Philadelphia region, falling to May 2020 levels as new orders
sank and prices paid increased. Slightly lower mortgage rates stoked a pick-up in
homebuyer demand in early February, sending the NAHB Housing Index to its
highest reading since September. Still, sentiment stands far below last year’s peak
and housing starts decreased 4.5% in January as new construction stalled.
Internationally, Eurozone Q4 GDP managed to stay in positive territory on the second
estimate, and the European Commission upped its growth forecast to 0.9% for 2023
from the prior 0.3% in November. In the UK, annual CPI slowed to +10.1% in January,
down from October’s high of 11.1% but still exacting a huge toll on British households.
Their retail sales rose slightly in January, but the demand outlook remained weak.
Australia’s consumer sentiment soured in February as the jobless rate jumped and
the prospect of further interest rate hikes loomed. And finally, Japan’s economy
narrowly averted a recession in Q4 2022, expanding much less than expected at 0.6%.
The next BOJ governor nominee, Kazuo Ueda, faces challenges normalizing the
central bank’s ultra-loose policy, and his background suggests no sudden changes
are likely. [2]

Chart of the Week:

The U.S. Dollar Index ($DXY) rose to its highest point since the start of the year after lower unemployment claims, strong retail sales, and stubborn inflation raised prospects of further rate hikes. Three weeks ago the dollar index bottomed just above $100, and has been steadily climbing since. Last week, however, sentiment shifted by establishing both a higher low and a higher high, indicating a positive change in the short-term technical trend. Last week’s move also broke above a down-sloping resistance line and the 50-day exponential moving average, and also pulled the MACD into positive territory for the first time since November. The next major resistance level is at the year-to-date high of $105.60. Click HERE to see the 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] SIMON portal, FIGmarketing.com; [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.

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