Outlook for week of 10-14 April

The current employment data, inflation data, and the start of earnings season are expected to cause the markets to remain choppy and volatile, with little real progress. The US Fed has been warning of the need for modest labor market deterioration to control inflation. However, job losses may lead to a recession as consumer spending drives the US economy. The market is currently uncertain about whether bad news is good or bad, as it tries to decide the impact of the situation. With several important reports due next week, such as the March employment situation, CPI and PPI, and Q1 earnings season, including FRC, PNC, WFC, JPM, and C, the upcoming week is expected to be even more volatile. The indicators for this week have slightly downgraded the primary outlook to Neutral.

The market performance in 2023 so far shows a preference for cyclical sectors. This can be seen in the year-to-date (YTD) performance of the market, broken down by the 11 market sectors. The cyclical sectors that include Communication Services, Information Technology, Consumer Discretionary, Materials, and Real Estate, have all performed well in 2023, showing gains of 20.9%, 19.3%, 12.3%, 2.7%, and -0.4%, respectively. The defensive sectors that include Consumer Staples, Utilities, Health Care, and Financials, have not performed as well. They have shown gains of 1.0%, -1.8%, -2.0%, and -7.0%, respectively. Energy is the only defensive sector that has shown a decline of 1.3%. Overall, the market is displaying a cyclical bias in 2023.

Economic reports for the upcoming week:

• Monday, April 10th: Wholesale Inventories for Feb - measures manufacturing inventory data which may affect future GDP levels but not a good indicator of consumer activity.
• Tuesday, April 11th: None.
• Wednesday, April 12th: CPI for Mar - measures the change in the average price level of a fixed basket of goods and services, relative to the base year of 1984. Treasury Budget for Mar - measures year to year changes in tax receipts and outlays.
• Thursday, April 13th: PPI for Mar - measures inflation at the wholesale or manufacturing level. Initial Jobless Claims - reports claims for the week ending Apr. 1, 2023, and the four-week moving average.
• Friday, April 14th: Retail Sales for Mar - a widely watched gauge of consumer sentiment and spending habits. International Trade (Import & Export Prices) for Mar - tracks the prices of goods bought in the U.S. but produced abroad and the prices of goods sold abroad but produced in the U.S. Industrial Production & Capacity Utilization for Mar - measures industrial output and output potential. Business Inventories for Feb - a measure of goods ready for sale. University of Michigan Consumer Sentiment for Apr - a collection of data on consumer attitudes and expectations, intended to predict discretionary spending, and released mid-month.