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

Buckle up for the year’s busiest week so far, with three central bank decisions, the monthly U.S. labor reports, and a slew of big-name earnings  announcements. The FOMC seems to agree on slowing the pace of rate hikes, but do not want to risk inflation becoming entrenched and may need to reinforce such expectations with Wednesday’s statement. On Thursday morning, the EuropeanCentral Bank is likely
to raise rates by 50bps, while the Bank of England may be divided on how much to hike as it grapples with sky-high inflation and a slowing economy. Back in the U.S.,
Wednesday’s ADP and JOLTS reports precede Friday’s nonfarm payrolls, where
the pace of wage growth will be closely scrutinized. Other domestic events of note
include consumer confidence, ISM PMIs, and industrial productivity. Earnings season continues with tech giants Apple, Amazon, Meta, and AMD, among others. Internationally, OPEC+ meets on Wednesday with much to discuss around China’s
reopening and Russian sanctions, but the next policy-setting gathering isn’t until
June. Eurozone CPI and China PMIs round out the overseas calendar. [1]

Recapping Last Week

U.S. equities advanced, potentially breaking out of a year-long technical downtrend
(see tweet here), as economic data boosted investors’ hopes for a soft landing. The
Nasdaq Composite Index jumped 4%+, while the S&P500 and Russell 2000 gained 2.5%. Nine of 11 S&P500 sectors rose, led by communications, technology, and consumer discretionary, while the defensive sectors lagged. Crude oil slipped 3%,
while gold prices edged up to reach 9-month highs. U.S. Treasury yields rose after 2022 Q4 GDP growth came in slightly above expectations at 2.9%. Consumer spending, which accounts for 68% of GDP, decreased from the prior quarter but remained positive, while inflation readings fell. The Core PCE Index was  +4.4% YoY in December, down from +4.7% the month before and trending in a favorable direction for Federal Reserve policymakers. U.S. flash PMIs remained in contraction but
improved MoM, while input prices for goods and services ticked up for the first time
since May 2022. Orders for durable goods in December were much better than
forecast, largely due to a surge in aircraft demand. Corporate earnings releases were generally well received, but concerns of an earnings recession linger as profits were
down 3% YoY with 20% of S&P500 companies having reported. U.S. new and pending home sales rose in December, but the 20-30% declines YoY were a significant drag on Q4 GDP. The Conference Board’s Leading Index still points towards a potential recession this year, so the labor market and consumer spending will be closely watched for any signs of fatigue. Internationally, the Bank of Canada became the
first major central bank to say it is likely done with rate hikes for now after raising its
benchmark rate 25bps to 4.5%, citing recession concerns. In Europe, consumer confidence improved modestly but  remained under pressure from inflation. Germany’s business outlook brightened in January, while PMIs across the region
inched closer to expansion. That contrasted sharply with activity in the UK, where
readings fell to the lowest levels in two years. Finally, the Bank of Japan’s Summary
of Opinions revealed a split on how to bring inflation down, as the central bank would like to see increased demand and wages before raising rates. [2]

Chart of the Week: 

The PHLX Semiconductor Index (SOX) has been on another level this year, surging
over 5% last week and 16% YTD, and lifting the Nasdaq-100 Index to a +11% start.
Friday’s session started lower after disappointing earnings from Intel, but sentiment quickly reversed. Signs of a technical trend change were already in place at the end of 2022, with a break above down sloping resistance and a significantly higher low in December. This year’s rise confirmed the reversal with a higher high to boot. As of last week,the 20, 50 and 200-day exponential moving averages are pointing higher, with price above them all. A higher high for the MACD would lend technical credence to this rally and may happen early this  week. Strong performance from this group could bode well for growth stocks in 2023. 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.

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