The Asset Guidance Group Monday Outlook for the Week Ahead Starting Monday February 6, 2023

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

Investors could probably use a breather after the past two weeks’ data deluge, and this week’s calendar will oblige with a typically lighter  schedule following the jobs reports. In the U.S., speeches by FOMC members will  resume in earnest, including Chair Powell on Tuesday at the Economic Club of Washington DC. U.S. Treasury 10- and 30-year auctions should draw some interest midweek, while the first look at February’s consumer sentiment arrives on Friday. Earnings season is winding down, but reports  from Disney and Uber will merit some attention. Overseas, Australia is expected to raise rates by 25bps later tonight, as the RBA walks the fine line between a fragile housing market and rising inflation. The UK will release the first estimate of Q4 GDP on Friday, which could reveal the second straight quarter of contraction and a technical recession. The European docket includes retail sales, Germany’s delayed CPI figures along with industrial
production and factory orders, and economic forecasts from EU members. Lastly, China’s consumer inflation is expected to accelerate after several
months of pandemic-related declines. [1]

Recapping Last Week

U.S. equities posted a second straight week of solid gains despite a stronger than
expected monthly jobs report that kept additional interest rate hikes on the table. The Nasdaq Composite and Russell 2000 Indexes soared 3-4% even as technology earnings disappointed, while the S&P500 rose 1.5%. Eight of 11 S&P500 sectors finished positive, led by communications, technology, and consumer discretionary,
while energy stocks struggled as crude oil slumped 7%+. U.S. Treasury yields spiked on Friday as traders repriced year-end fed funds rate expectations. U.S. payrolls
jumped by a whopping 517K in January, and the unemployment rate fell to 3.4%, the lowest level since 1969. But crucially, from the Fed’s point of view, MoM wage
growth was in line with  estimates and declined YoY from December. If inflation
continues to fall while the labor market remains strong, an economic soft landing is
plausible. Job openings rose in December, still hovering near a 2 to 1 ratio for every unemployed person. Earlier in the week, the FOMC raised rates by 25bps, and chair
Powell gave no indications of a pause but acknowledged disinflationary trends. In other news, U.S. consumer confidence slumped in January as recession concerns lingered, while ISM manufacturing PMI dropped for a fifth straight month as new orders plunged. Services strongly rebounded back into expansion after a brief dip in December, suggesting robust consumer spending in the sector. Non-farm productivity grew a healthy 3% in Q4 2022, but unit labor costs rose just 1.1% from the prior quarter, the smallest gain since Q1 2021 and more evidence that
inflationary pressures eased. Internationally, the European Central Bank raised rates by 50bps and is likely to do the same at its March meeting. January Eurozone CPI dipped to +8.5% YoY but did not include figures from Germany, which delayed its report due to technical issues. German GDP shrank unexpectedly at the end of 2022 as private  consumption fell, while December retail sales slipped as inflation weighed on holiday shoppers. The Bank of England signaled a potential slowdown
in rate hikes after a 50bps increase and a less pessimistic economic forecast. Finally,
China saw activity swing back to growth in January as Covid-19 infections eased during the Lunar New Year holiday. [2]

Chart of the Week: 

Despite a rough start last Monday, the Nasdaq-100 Index (NDX) advanced for the
fifth consecutive week. Much of the added strength came after Fed Chair Powell’s press conference Wednesday, noting
receding inflation. This brought YTD performance for NDX to near +15% but also led price to technical resistance and the RSI into overbought territory for the first time in over a year. Friday’s decline dropped the RSI out of the overbought zone, traditionally signaling a downward retracement in the short term.
This year’s upsloping trend line converges with other potential support near  12,000,
a level to watch if Friday’s selling continues. 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] 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.

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

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