By Bill Hornbarger, Chief Investment Officer
Three Things to Watch
- There is important data to keep an eye on this week, including GDP, durable goods orders, pending home sales, and the Fed’s favored inflation measure, the personal consumption expenditures deflator. The data is expected to confirm a robust period for the economy and higher inflation. First quarter GDP is expected at 6.9% with estimates ranging as high as 8.5% to 9%. The inflation data is expected to move markedly higher on a combination of rising demand, supply chain issues, and friendly comparisons to last year’s COVID depressed numbers.
- The Federal Open Market Committee meets this week and will release its decision on Wednesday followed by a press conference with Chairman Jerome Powell. The Fed is not expected to take any action but is expected to defend its policy to let inflation run above its target. Recent data on prices has been higher and the Fed has stated it expects this development to be transitory.
- Roughly one-third of the S&P 500 companies are expected to report earnings this week highlighted by Tesla, Alphabet, Microsoft, Facebook and, Amazon. According to Refinitiv, 86% of companies have reported better-than-expected earnings this quarter and corporate profits are expected to be about 34% for first quarter.
Three Things to Know
- The National Association of Realtors reported last week that the median price of an existing home in the U.S. rose to a record $329,100 in March. That is up 5.92% from February and 17.2% from a year earlier. (Source: Bloomberg, Haver Analytics)
- The Baltic Dry Index is at the highest level since October 2010, reflecting both shipping container shortages as well as pent up demand, as the global economy slowly reopens. The Baltic Dry Index measures changes in the cost of transporting various raw materials, such as coal and steel and is often viewed as a leading indicator of economic activity because changes in the index reflect supply and demand for important materials used in manufacturing. (Source: Investopedia, Holger Zschaepitz @Schuldensuehner)
- The share of young people in their 20s and early 30s living with their parents is now at a historical high going back over a century. (Source: Hedgeye, @HoweGeneration)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.