Is It Time For A Stock Market Pullback?

Major Retailers are due to report earnings this week

Author

Mark Roussin
August 14, 2023

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Market Talk ⏪

We always begin with 5 important topics from the week prior and/or related to the week ahead for investors to be mindful of.

  1. The Consumer Price Index rises by 3.2% annually: The Bureau of Labor Statistics shared the CPI report on Thursday and reported a 3.2% increase YoY in July 2023. The CPI growth during the month can primarily be attributed to an increase in shelter costs, causing over 90% of the hike. Although the increase is lower than the expected 3.3% increment and on the higher side, underlying inflation in the country is still cooling off. However, on a month over month basis, we did see inflation tick higher by 0.2% which does give some cause for concern, especially with Core CPI still remaining well above the Fed’s stated goal of 2%. Stagnant inflation could weigh on the economy moving forward.

  2. Jobless claims move higher in the prior week: The number of people filing unemployment benefits in the US inched up to be 6,000 higher than the previous week and reached a total 227,000. However, the US labor market still remains resilient with layoffs dropping to an 11-month low, productivity up at 3.7%, and growth in workers’ productivity, but something to keep an eye on.

  3. Stronger than expected PPI report: According to the report released by the US Bureau of Labor Statistics on Friday, the producer price index rose 0.3% in July. The monthly increase in selling prices received by the domestic producers was higher than expected and has been the highest monthly rise since January 2023.

  4. Upward move in treasury bond yields: The bond yields of the US Treasury showed an uptick after the PPI report was released on Friday. The PPI report for the month of July indicates a higher-than-expected rate of inflation and puts the Fed on track to potentially hike rates once again. We still have some time until the Fed meeting, so a lot can still change.

  5. Trade Deficit declines in June: According to reports released by the US government last Tuesday, the trade deficit in the US narrowed in June 2023. The trade gap decreased from $68.3 billion in May to $65.5 billion in June due to the lowest slide in imports since 2021. Exports in June dropped $0.3 billion while imports shrunk by $3.1 billion, narrowing the US trade deficit to a three-month low.

Deep Dive 📰

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Premium subscribers received my MONTHLY PORTFOLIO UPDATE this week, so make sure you are signed up so you can get a look at what I have been buying and selling.

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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.

In the last week, the Fear & Greed Index went down yet again and is now firmly in the Greed state as it continues to move lower as the market takes a breather. Currently, the index has a reading of 66, which is slightly lower than the prior week’s reading of 69.

Earnings on Deck 💰

Major retailers are due to report earnings this week which will give investors a look into the health of the US consumer. Here is a look at the company’s reporting this week:

Analyst Upgrades/Downgrades 📝

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

  • Wolfe downgrades Stanley Black & Decker to underperform from peer perform

  • Deutsche Bank names Walmart and Ulta as top picks

  • UBS downgrades UPS to neutral from buy

  • Jefferies upgrades Eli Lilly to buy from hold

  • Telsey downgrades Home Depot and Lowe’s to market perform from outperform

Economic Data This Week 📆

Monday

  • None

Tuesday

  • US Retail Sales

  • Import Price Index

Wednesday

  • Housing Starts

  • Building Permits

  • Industrial Production

  • FOMC minutes of July meeting

Thursday

  • Initial jobless claims (week ended Aug. 12)  

  • Philadelphia Fed manufacturing survey

Friday

  • None

Other Resources 📺

If you have not done so yet, check out my growing YouTube community of more than ~31,500 like-minded investors where I publish weekly videos focused on building wealth through investing.

Here is the latest video I released: Ranking 5 Dividend Growth Stocks From HIGHEST Quality to Lowest:

Here is another video I put out last week: 7 of the BEST REITs:

Here are a few others of my latest videos:

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Happy Investing!

Mark

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