Weekend Updates - 16 April 2023

Weekend Updates 

First of all, those who reside in California, the IRS and California Franchise Tax Board extended the federal and state tax deadline to Oct. 16, 2023 for most California counties. Please check the IRS site for your county.

Last week, we saw many economic news and stock market as usual remained volatile. DOW was the only index that closed higher for the week and last four consecutive weeks.

Consumer Price Index (CPI)
: The headline CPI increased 5% year-over-year and 0.1% in March. Economists had anticipated CPI to rise 0.4% month-over-month and 6% year-over-year. Core CPI, which excludes food and energy, rose 5.6% year-over-year and 0.4% in March. 

Producer Price Index (PPI)
: The March producer price index (a measure of prices paid by companies) declined 0.5% from the prior month vs. Wall Street expectations to remain flat. This was a significant drop with annualized price increases of only 2.7% from an upwardly revised 4.9%. Excluding food and energy, the index was down 0.1% from the prior month, while economists estimated a 0.2% month-to-month increase. This news sent stocks higher on Thursday.

Retail Sales: Retail sales was down -1% last month as consumers have been dealing with growing fears of recession. Wall Street expected retail sales to fall only 0.5% fall. I anticipate that we may see further declines months ahead due to potential rise in unemployment and higher credit market after banking collapse. 

FOMC Minutes: The Federal Open Market Committie minutes note that "U.S. banking crisis is likely to tilt the economy into recession later this year". Fed officials expect GDP of only 0.4% for all of 2023. With the Atlanta Fed tracking a Q1 GDP growth of about 2.2%, meaning that 2nd we can expect further deterioration in the GDP in the later part of the year. 

Weekly Unemployment: As of Thursday’s report, the four-week average for weekly unemployment claims was 240,000, slightly higher than what was seen before the pandemic.

Despite all the negative economic news the Fed officials still keep making lots of noise about inflation. As I said on my April blog, we may probably see one more rate hike on May 3rd when FOMC meets.

Q1 Earnings:

As you all know Q1 2023 earnings have kicked-off. On Friday, JPM Chase, Citi Bank (C) and Wells Fargo reported their earnings beating both top and bottom line.

This week we will see some more financial companies and some mega tech earnings: TESLA on Wednesday, NETFLIX on Tuesday and IBM on Wednesday. There are tons of companies expected to report this week but I will be looking more closely to these two earning. Also, some other key earnings will be IBM, TSM, BAC, JNJ, GS, MS, UAL etc.

The week after that, other tech titans like AMAZON, Microsoft, Google, META are expected to release their Q1 earnings. Of course, not to forget Enphase Energy (ENPH) on 4/25 and Apple (AAPL) is expected to report on Thursday, 5/4. 

Every earning season is important but this earning season (Q1 FY23) is very critical from different aspects of the stock market future momentum.