Fed Hikes Rates For 10th Consecutive Time

Labor market remains stubborn in lite of rate hikes

Author

Mark Roussin
May 08, 2023

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Market Talk ⏪

Here is a look at 5 topics from the week prior and/or related to the week ahead for investors to be mindful of:

  1. Labor force remains strong. Nonfarm payrolls increased by 253,000 in APril, far higher than the 180,000 expected. Most of the new jobs came from within the health care and business services sector. Unemployment rate sits at 3.4%, which is a multi year low. The labor force remains strong, regardless of the numerous rate hikes with the hopes of breaking inflation.

  2. 10th Consecutive rate hike. Another month, another Fed meeting, which resulted in the 10th consecutive rate hike. Regardless of the financial instability within the financial sector, which has brought immense volatility to the banking sector, the Fed stuck to their guns of bringing inflation back down to their stated goal of 2%. This week, investors will get the latest read on CPI and PPE.

  3. Berkshire Hathaway Annual Conference. Warren Buffett and his longtime right-hand Charlie Munger wrapped up yet another Berkshire Hathaway annual conference in which they discussed the company and took questions from the audience. They touched on how interest rates would impact commercial real estate, and the threat of AI, cash not being trash, discussed Occidental Petroleum, Apple, and Paramount stocks to name a few. Buffett & Co also discussed the banking sector and how depositors should not need to worry at the moment.

  4. Banking Sector remains volatile. Last week we got news that JPMorgan Chase acquired failed bank, First Republic. The SPDR S&P Regional Banking ETF fell 10%, with PacWest Bancorp being one of the worst losers on the week. Banking troubles will tighten lending, which should also help with inflation moving forward.

  5. Decision time regarding the debt ceiling. Congress continues to be in disagreement regarding a decision related to raising the country’s debt ceiling. The political impasse is causing issues which could conclude in the country defaulting on its debt if a decision is not made soon.

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US Markets 🇺🇸

Here is a performance summary for US Equities:

Here is a look at US Treasuries:

The Fear & Greed Index measures market sentiment based on the following seven factors: put/call ratios, junk bond demand, stock price breadth, market volatility, stock price strength, safe-haven demand, and market momentum.

When it comes to the Fear and Greed Index, we have seen the markets get a little more volatile, which has the Fear and Greed Index still reading GREED, which is little changed from the prior week. Currently, the index has a reading of 59, which is slightly down from the prior week reading of 60.

Earnings on Deck 💰

Another jam packed week of earnings. Here is a look at who's reporting this week:

Dividend News 📝

Here are some notable analyst upgrade/downgrades from the previous week:

  • Morgan Stanley upgrades General Motors to overweight from equal weight

  • Goldman Sachs downgrades Exxon to neutral from buy

  • Citi opens a positive catalyst watch on AT&T

  • JPMorgan upgrades Kellogg to neutral from underweight

This Week 📆

Monday

  • Wholesale inventories (March)

  • Fed Senior Loan Officer Opinion Survey

Tuesday

  • NFIB Small Business Index (April)

Wednesday

  • CPI (April)

Thursday

  • PPI (April)

  • Initial jobless claims (week ended May 6)

Friday

  • Import/export price indexes (April)

  • University of Michigan consumer sentiment index (May preliminary)

Other Resources 📺

If you have not done so yet, definitely check out my growing YouTube community where I publish weekly videos on Dividend Stocks I am looking at.

Here is a look at my latest video: 3 Dividend Stocks To Beat Stagflation:

Another video I put out last week:2 Undervalued REITs To BUY:

Here are a few others of my latest videos:

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Happy Investing!

Mark

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