Summary Of the Markets Today:

• The Dow closed down 58 points or 0.18%,
• Nasdaq closed up 0.40%,
• S&P 500 closed up 0.14%,
• Gold $1818 down $1.60,
• WTI crude oil settled at $77 down $1.06,
• 10-year U.S. Treasury 3.981% up 0.006 points,
• USD $106.65 up $0.04,
• Bitcoin $22,090 – 24H Change up $27.19 – Session Low $21,913

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for March 2023

Today’s Economic Releases:

ADP’s February 2023 National Employment Report shows Private sector employment increased by 242,000 jobs and annual pay was up 7.2% year-over-year. Gotta wonder if Friday’s BLS employment report will also show strong gains which are inflationary. Nela Richardson, ADP’s chief economist stated:

There is a tradeoff in the labor market right now. We’re seeing robust hiring, which is good for the economy and workers, but pay growth is still quite elevated. The modest slowdown in pay increases, on its own, is unlikely to drive down inflation rapidly in the near-term.

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis reported that the goods and services deficit increased by 1.6% – with exports up 3.4% and imports up 3.0%. This is a good litmus test for the economy – increases in imports generally show the US economy is growing and increases in exports generally show the global economy is growing.

The number of job openings decreased to 10.8 million on the last business day of January. Over the month, the number of hires and total separations changed little at 6.4 million and 5.9 million, respectively. Within separations, quits (3.9 million) decreased, while layoffs and discharges (1.7 million) increased. Even with the decrease in job openings this month – the number of job openings is very large and is enough to continue to fuel high employment gains.

The Federal Reserve’s Beige Book shows overall economic activity increased slightly in early 2023. Six Districts reported little or no change in economic activity since the last report, while six indicated economic activity expanded at a modest pace. On balance, supply chain disruptions continued to ease. Consumer spending generally held steady, though a few Districts reported moderate to strong growth in retail sales during what is typically a slow period. Auto sales were little changed, on balance, though inventory levels continued to improve. Several Districts indicated that high inflation and higher interest rates continued to reduce consumers’ discretionary income and purchasing power, and some concern was expressed about rising credit card debt. Travel and tourism activity remained fairly strong in most Districts. Manufacturing activity stabilized following a period of contraction. While housing markets remained subdued, restrained by exceptionally low inventory, an unexpected uptick in activity beyond the seasonal norm was seen in some Districts along the eastern seaboard. Commercial real estate activity was steady, with some growth in the industrial market but ongoing weakness in the office market. Demand for nonfinancial services was steady overall but picked up in a few Districts. On balance, loan demand declined, credit standards tightened, and delinquency rates edged up. Energy activity was flat to down slightly, and agricultural conditions were mixed. Amid heightened uncertainty, contacts did not expect economic conditions to improve much in the months ahead.

A summary of headlines we are reading today:

Of course, the market decline today was caused by the realization that the federal funds rate will remain elevated longer and likely higher than the markets desire – see today’s economic releases below.

Summary Of the Markets Today:

• The Dow closed down 575 points or 1.72%,
• Nasdaq closed down 1.25%,
• S&P 500 closed down 1.53%,
• Gold $1819 down $36.40,
• WTI crude oil settled at $77 down $3.04,
• 10-year U.S. Treasury 3.972% down 0.011 points,
• USD $105.61 up $1.26,
• Bitcoin $22,060 – 24H Change down $273.69 – Session Low $22,032

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for March 2023

Today’s Economic Releases:

Federal Reserve Chairman Jerome Powell said interest rates are likely to head higher than central bank policymakers had expected. If the totality of the data were to indicate that faster tightening is warranted, the Federal Reserve would be prepared to increase the pace of rate hikes. The markets were hoping for a quick end to the federal funds rate increases and this speech seems to be geared to dampen this hope. Powell said the current trend shows that the Fed’s inflation-fighting job is not over and stated:

The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated. If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.

The CoreLogic Home Price Insights report shows home prices continued their gradual free fall in January 2023, with the 5.5% annual gain down for the ninth straight month and the lowest recorded since June 2020. Deceleration was particularly noticeable in the Western U.S. and other states and metro areas that saw substantial appreciation over the past few years. Three Northwestern states (along with Washington, D.C.) posted at least slight annual declines as migration patterns that began during the pandemic shifted, slowing demand and driving price decreases.

January 2023 sales of merchant wholesalers were up 1.0% from the revised December level and were up 3.6% (non-inflation adjusted) from the revised January 2022 level. Total inventories of merchant wholesalers were down 0.4% from the revised December level. Total inventories were up 15.8% from the revised January 2022 level. The January inventories/sales ratio for merchant wholesalers was 1.34. The January 2022 ratio was 1.20. This shows that inventory levels are elevated relative to sales (green line on the graph below) but this ratio is headed in the right direction as sales growth is improving and inventory growth is declining.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed up 40 points or 0.12%,
• Nasdaq closed down 0.11%,
• S&P 500 closed up 0.07%,
• Gold $1852 down $2.60,
• WTI crude oil settled at $81 up $0.88,
• 10-year U.S. Treasury 3.977% up 0.014 points,
• USD $104.32 down $0.20,
• Bitcoin $22,411 – 24H Change down $77.58 – Session Low $22,330

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for March 2023

Today’s Economic Releases:

New orders for manufactured goods in January 2023, down two of the last three months, decreased 1.6% following a 1.7% December increase. On a year-over-year basis, new orders increased by 4.3% (blue line on the graph below) but when inflation-adjusted has contracted by 3.2% (red line on the graph below).

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed up 387 points or 1.17%,
• Nasdaq closed up 1.97%,
• S&P 500 closed up 1.61%,
• Gold $1861 up $20.20,
• WTI crude oil settled at $80 up $1.59,
• 10-year U.S. Treasury 3.96% down 0.113 points,
• USD $104.54 down $0.49,
• Bitcoin $22,309 – 24H Change down $1,132.23 – Session Low $22,147
• Baker Hughes Rig Count: U.S. -4 to 749 Canada +2 to 246

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for March 2023

Today’s Economic Releases:

The ISM Services PMI for the US was at 55.1 in February 2023, little changed from 55.2 in January and above expectations of 54.5. The business activity component declined from 60.4 to 56.3 – any number above 55 for this component indicates economic expansion.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed up 342 points or 1.05%,
• Nasdaq closed up 0.73%,
• S&P 500 closed up 0.76%,
• Gold $1843 down $2.10,
• WTI crude oil settled at $78 up $0.27,
• 10-year U.S. Treasury 4.069% up 0.073 points,
• USD $104.96 up $0.47,
• Bitcoin $23,467 – 24H Change up $55.70 – Session Low $23,242

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for March 2023

Today’s Economic Releases:

Nonfarm business sector labor productivity (updated) decreased 1.8% year-over-year in 4Q2022 – whilst unit labor costs increased 6.8% year-over-year. Never a good sign when labor costs increase faster than productivity.

In the week ending February 25, the advance figure for unemployment insurance weekly claims 4 week moving average was 193,000, an increase of 1,750 from the previous week’s unrevised average of 191,250. The unemployment claims rate is consistent with times of economic expansion.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed up 5 points or 0.02%,
• Nasdaq closed down 0.66%,
• S&P 500 closed down 0.47%,
• Gold $1845 up $7.90,
• WTI crude oil settled at $78 up $0.67,
• 10-year U.S. Treasury 4.004% up 0.09 points,
• USD $104.43 down $0.44,
• Bitcoin $23,409 – 24H Change up $138.67 – Session Low $23,062

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for March 2023

Today’s Economic Releases:

The headlines say construction spending during January 2023 was 5.7% above January 2022. If one inflation adjusts this data, construction spending is down 9.3% year-over-year (blue line on the graph below). This decline is across the board – private, public, residential, and nonresidential.

The February Manufacturing PMI registered 47.7%, 0.3 percentage points higher than the 47.4% recorded in January. Regarding the overall economy, this figure indicates a third month of contraction after a 30-month period of expansion. In the last two months, the Manufacturing PMI has been at its lowest level since May 2020, when it registered 43.5%. The New Orders Index remained in contraction territory at 47%, 4.5 percentage points higher than the figure of 42.5 percent recorded in January.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed down 232 points or 0.71%,
• Nasdaq closed down 0.10%,
• S&P 500 closed down 0.3%,
• Gold $1835 up $9.80,
• WTI crude oil settled at $77 up $1.27,
• 10-year U.S. Treasury 3.924% up 0.002 points,
• USD $104.97 up $0.29,
• Bitcoin $23,215 – 24H Change down $101.08 – Session Low $23,223

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for March 2023

Today’s Economic Releases:

The S&P CoreLogic Case-Shiller 20-City Composite posted a 4.6% year-over-year gain, down from 6.8% in the previous month. Miami, Tampa, and Atlanta reported the highest year-over-year gains among the 20 cities in December. Miami led the way with a 15.9% year-over-year price increase, followed by Tampa in second with a 13.9% increase, and Atlanta in third with a 10.4% increase. All 20 cities reported lower prices in the year ending December 2022 versus the year ending November 2022. CoreLogic Chief Economist Selma Hepp added:

With a full year of data, S&P CoreLogic Case-Shiller Index once again proved that 2022 was incredibly volatile for the housing market. By all accounts, housing markets experienced historic highs and lows in a matter of months. In December, the CoreLogic S&P Case-Shiller Index posted a 5.8% year-over-year increase, marking the eighth straight month of decelerating annual home price gains and a 15-percentage point slower rate of growth than at the peak in May 2022. In contrast, December’s annual gain was the slowest since August 2020. Home prices are down 4.4% from spring peak to December, with four times larger declines in San Francisco and Seattle. New York, Cleveland, and Chicago are faring relatively better, with total declines at only 3% through December.

While the rapid reversal of price growth is evident across markets, West and Mountain West continue to lead with declines while some recently hot markets, such as Tampa, Florida, Dallas and San Diego, are rapidly catching up. Interestingly though, despite recent price declines, the national annual average growth of 15% for 2022 is still the second highest on record.

The Richmond Fed’s manufacturing firms reported a deterioration in business conditions in February, according to the most recent survey from the Federal Reserve Bank of Richmond. The composite manufacturing index decreased from −11 in January to -16 in February. Of its three component indexes, shipments saw the largest change, declining notably from −3 in January to −15 in February. The employment index declined from −3 to −7 in February, while the new orders index remained unchanged at −24. Most other manufacturing surveys have shown declining manufacturing.

According to Challenger, Gray & Christmas, Inc., the number of CEO changes at U.S. companies rose 12% from 100 in December to 112 in January. January’s total is down 10% from the 125 CEOs who left their posts in the same month one year prior. January’s has the highest number of CEO exits on average than any other month.

The Chicago Business Barometer declined by a further 0.7 points in February to 43.6, the lowest since November ’22. The headline index signaled a sixth consecutive month of contractionary business activity. The markets believe this index provides a good forecast for the national ISM Manufacturing PMI.

The Conference Board Consumer Confidence Index decreased in February for the second consecutive month. The Index now stands at 102.9 (1985=100), down from 106.0 in January (a downward revision). According to the authors of this index, the decrease reflected large drops in confidence for households aged 35 to 54 and for households earning $35,000 or more.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed up 72 points or 0.22%,
• Nasdaq closed up 0.63%,
• S&P 500 closed up 0.31%,
• Gold $1824 up $7.00,
• WTI crude oil settled at $76 down $0.65,
• 10-year U.S. Treasury 3.926% down 0.023 points,
• USD $104.66 down $0.56,
• Bitcoin $23,347 – 24H Change down $275.47 – Session Low $23,166

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for March 2023

Today’s Economic Releases:

New orders for manufactured durable goods in January 2023, down two of the last three months, decreased to 3.0% (0.1% inflation adjusted) year-over-year growth from 11.2% (5.6% inflation adjusted) in December 2022. It appears that this decrease was caused by a significant fall in new orders for civilian aircraft. Hold on to the seat of your pants as next month’s (February 2023) civilian aircraft new orders should explode with Air India’s 210 plane order to Boeing.

The Pending Home Sales Index (PHSI) — a forward-looking indicator of home sales based on contract signings — improved 8.1% to 82.5 in January. Year-over-year, pending transactions dropped by 24.1%. An index of 100 is equal to the level of contract activity in 2001. NAR Chief Economist Lawrence Yun stated:

Buyers responded to better affordability from falling mortgage rates in December and January.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed down 337 points or 1.02%,
• Nasdaq closed down 1.69%,
• S&P 500 closed down 1.05%,
• Gold $1819 down $8.10,
• WTI crude oil settled at $77 up $1.15,
• 10-year U.S. Treasury 3.953% up 0.072 points,
• USD $105.23 up $0.64,
• Bitcoin $23,247 – 24H Change down $709.07 – Session Low $22,966
• Baker Hughes Rig Count: U.S. -7 to 753 Canada -4 to 244

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for February 2023

Today’s Economic Releases:

Real disposable personal income (DPI) increased 1.4% month-over-month (up 2.8% year-over-year – red line on the graph below) and real personal consumption expenditures (PCE) increased 1.1% month-over-month (up 2.4% year-over-year – blue line on the graph below). These are inflation-adjusted numbers. and is far from showing recessionary tendencies. However, inflation has shown little moderation (green line on the graph below) which means the Fed’s efforts to curb inflation are not having a significant effect.

Sales of new single‐family houses in January 2023 were 7.2% above the revised December rate of 625,000 but 19.4% below the January 2022 estimate of 831,000. The median sales price of new houses sold in January 2023 was $427,500. The average sales price was $474,400. Looks like a nice jump in houses sold at a lower price – but clearly the higher mortgage rates are affecting this sector.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed up 109 points or 0.33%,
• Nasdaq closed up 0.72%,
• S&P 500 closed up 0.53%,
• Gold $1830 down $11.20,
• WTI crude oil settled at $76 up $1.52,
• 10-year U.S. Treasury 3.879% down 0.044 points,
• USD $104.55 down $0.03,
• Bitcoin $23,938 – 24H Change up $98.41 – Session Low $23,678

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for February 2023

Today’s Economic Releases:

Real gross domestic product (GDP) second estimate increased at an annual rate of 2.7% in 4Q2022. In the advance estimate for 4Q2022, the increase in real GDP was 2.9%. The updated estimates primarily reflected a downward revision to consumer spending that was partly offset by an upward revision to nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, were revised up. I prefer to view Real GDP as the percent increase from the same period one year ago which shows a continued moderation – now only 0.9% year-over-year.

Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +0.23 in January from –0.46 in December. Three of the four broad categories of indicators used to construct the index made positive contributions in January, and three categories improved from December. The index’s three-month moving average, CFNAI-MA3 (purple line on the graph below), moved up to –0.26 in January from –0.34 in December. The CFNAI-MA3 is used for economic forecasting and it is showing a slow growth economy but not recessionary.

A summary of headlines we are reading today: