Labor Force Starting To Show Cracks

Last week we saw Job Openings fall to 2 year low

Author

Mark Roussin
April 10, 2023

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Market Talk ⏪

Overall, the market had a positive week last week, but the cracks are becoming more evident. Early in the week, we saw data regarding job openings fall to 9.93 million, a drop of 632,000 from January’s totals and the first time we have seen this data drop below 10 million since May 2021. Analysts were estimating job openings of 10.4 million.

This is the first sign that the Fed and their plan is starting to work. They have set out since the beginning with the hopes of slowing a red hot labor force. I have spoken about this for a number of weeks within this newsletter.

As the economy slows, companies are less likely to grow personnel. As the number of position openings lessen, employees looking to job hop would reduce also, which in itself would help bring down inflation.

On Friday, we got word that the economy added 236,000 jobs in the month of March, which again showed the resiliency of the US economy. The US unemployment rate stood at 3.5%. The private payroll report showed a slowdown within that sector.

This week, on Wednesday, we will get the latest reading on where inflation (CPI) stands after continued rate hikes and a labor force beginning to show some signs of cracking. Any surprise slowdown to inflation could be a boost for stocks in the near term.

If inflation is lower than expected and we continue to see pressure within the labor market, I would fully expect the Fed to potentially pause when it comes to rate hikes.

With some huge data points expected during the week, we end the week with the beginning of Q1 earnings reports from big banks such as JPMorgan and Wells Fargo.

In international news, OPEC surprisingly cut their oil output of 1.16 million barrels per day. This sent crude prices surging, and woke up some oil/energy related stocks that had been in a slowdown after a strong 2022.

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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 move back into the green and subsequently, the Fear & Greed Index have climbed to Greed levels once again, after being in a position of fear just a week ago. Currently, the index has a reading of 57, which is slightly up from the prior week reading of 34.

Earnings on Deck 💰

The Q1 earnings season officially kicks off on Friday with earnings due from some of the larger banks. Here are the earnings reports for the week:

Dividend News 📝

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

  • Stephens upgrades US Bancorp to overweight

  • William Blair upgrades Allstate to outperform

  • Bernstein upgrades Intel to outperform

  • Morgan Stanley upgrades Norfolk Southern to equal weight

  • Morgan Stanley upgrades CSX to equal weight

  • KeyBanc upgrades Comcast to overweight

  • JPMorgan upgrades Prudential to overweight

  • Raymond James upgrades Cigna to strong buy

  • Raymond James upgrades UnitedHealth Group to strong buy

  • Raymond James upgrades FedEx to outperform

  • Raymond James upgrades Wells Fargo to strong buy

This Week 📆

Monday

  • Wholesale Inventories

Tuesday

  • NFIB small business index

Wednesday

  • Consumer price index

  • FOMC minutes

Thursday

  • Jobless claims

  • Producer price index

Friday

  • Export and import price indexes

  • Retail sales

  • Industrial production

  • University of Michigan consumer sentiment

  • Fed H.8 data on assets and liabilities of U.S. commercial banks

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: Better Buy: ABBV or JNJ.

Here is the other video I published last week: 3 Discounted Dividend Aristocrats:

Here are a few others of my latest videos:

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Have questions? You can email me directly at [email protected].

Happy Investing!

Mark

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