The Asset Guidance Group Monday Outlook for the Week Ahead Starting Monday July 17, 2023

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

This week’s focus turns from inflation to earnings as the second quarter season gets underway. Several banks will report this week, hoping to show improvement after the regional bank failures back in March. Most banks passed
the Fed’s stress tests, but these earnings should reveal how healthy they really are. Tesla and Netflix earnings arrive on Wednesday, with their stocks having risen 50% and 30% respectively since their last reports. Retail sales figures will
come in from several areas of the world with China on Monday, the U.S. on Tuesday, and the UK and Canada both on Friday. Expectations are for a slight rise in the U.S., but the others are expecting lower numbers. U.S. housing starts and existing home sales Wednesday and Thursday and both are expected to drop slightly after recent advances. There are still some inflation figures coming from outside the U.S., with German PPI Thursday, and CPI from Canada and the UK earlier in the week. Finally, look for industrial production numbers from both China and the U.S., as well as the domestic Empire State and Philly Fed manufacturing indexes. [1]

Recapping Last Week

U.S. equities rallied last week, responding to encouraging inflation data and several earnings reports beating expectations. The S&P500 Index gained 2.5%, while the Nasdaq Composite and Russell 2000 jumped 3.5%. As good as that was, international stocks tracked by the MSCI EAFE Index outperformed, gaining
nearly 5%. All 11 S&P500 sectors rose, with  communications and  discretionary continuing to lead with 3.5% gains each. Earnings season kicked off on a positive note with JP Morgan, United Healthcare, and Wells Fargo all beating
expectations and adding confidence to the banking sector that has had a rough
start to the year. State Street Corp. was on the losing end, falling 12% on weaker revenue. U.S consumer credit expansion surprised to the downside at $7.2 billion versus $20.3 billion in April. Both consumer and producer price growth came in lower, confirming inflation deceleration and adding hope for an end to the Fed’s tightening cycle. Expectations on short-term inflation eased as well in the New York Fed Survey to a two-year low and U.S. import prices fell again in June. The
UK’s higher-than-expected claimant count eased fears of extreme rate hikes overseas, suggesting wages are near the peak, and monthly GDP contracted 0.1%. The Bank of Canada did however hike its overnight rate to 5%, still fearing further inflation. In China data showed different concerns, with a 5.4% drop in
producer prices YoY along with falling exports adding pressure for new stimulus. Back in the U.S., rates pulled back with 10- and 30-year treasuries dropping 23bps and 11bps respectively, pulling the U.S. Dollar Index down over 2%. This helped lift precious metals higher, with gold gaining 1.5% and silver rising 8% for the
week. U.S. unemployment claims fell and small business confidence and consumer sentiment showed further strength, while similar reports from the Eurozone were not as rosy. Germany’s ZEW sentiment and the EU Sentix Investor Confidence reports both dropped to -14.7 and -22.5 respectively. Australia’s
NAB business confidence report declined as well but not as severely. [2]

Chart of the Week:

The U.S. Dollar Index ($DXY) fell sharply last week to levels not seen in 15 months, after last week’s inflation data showed improvement and interest rates fell. The
index tracks the U.S. dollar against a basket of other currencies, so even though
it’s related, it’s not referring to actual purchasing power for goods and services. Yet a weaker dollar is generally a benefit to any U.S. company doing business abroad, as the products cost less in foreign currencies, therefore boosting potential profits. $DXY peaked in September of last year and fell into February, where it remained essentially flat until last week. Breaking the $100 support level is a significant potential signal for resuming the downtrend from last year, which could be a tailwind for global stocks.

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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The Asset Guidance Group Outlook for the Week Ahead Starting Aug 7, 2023

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