April 20, 2022
Market Performance (YTD)
Source: YCharts
Disclaimer: Past performance is no guarantee of future performance
What Optimists Might Point To
Despite the increasingly pessimistic outlook by economists, analysts’ outlook for earnings per share growth for 2022 continues to improve for most countries. pic.twitter.com/Q4b7C3CxUO
— Jeffrey Kleintop (@JeffreyKleintop) April 19, 2022
Earnings are expected to increase about 5% YoY in Q1.
We expect them to come in a little better, but think double digits could be hard to hit due to margin pressure.
Still, revenue should be up >10% for the fifth consecutive quarter as companies pass on higher prices. pic.twitter.com/DDxQzXhjXQ
— Ryan Detrick, CMT (@RyanDetrick) April 19, 2022
S&P 500’s forward operating margin has hooked lower but is still strong in absolute terms (for now) pic.twitter.com/TuoHluFwyR
— Liz Ann Sonders (@LizAnnSonders) April 19, 2022
“.. Yes, stimulus is fleeting.. but .. the lower-income class is now working more hours, making more per hour and growing take-home pay in the double digits, with a savings account 2x larger than pre-COVID. .. with more .. job opportunities than they’ve had in 30 years.” – B of A pic.twitter.com/SbnP8qVkyB
— Carl Quintanilla (@carlquintanilla) April 18, 2022
AAII Bulls below 20% is contrarian bullish $SPY pic.twitter.com/YWMzKAGlpu
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) April 19, 2022
Impressive rebound with industrial production. pic.twitter.com/MmHv75jhc1
— Eddy Elfenbein (@EddyElfenbein) April 18, 2022
Improvement in April Empire Manufacturing, up to 24.6 vs. 1 est. & -11.8 in March; new orders & shipments bounced from contractionary to expansionary territory; workweek expanded but employment dipped down to lowest since late-2020 … 6m expectations lowest since pandemic began pic.twitter.com/YpBJZT5OSs
— Liz Ann Sonders (@LizAnnSonders) April 18, 2022
Capacity utilization was still on the rise in March, now at 78.3%. This is a metric that prevents me from getting too negative on the economy…would have to see it stall out or roll over. pic.twitter.com/rxMM0LXhMw
— Liz Young (@LizYoungStrat) April 18, 2022
Bank of America's average loans and leases were up 8%, "led by strong commercial loan growth as well as higher consumer balances," while average deposits were up 13% to $2 trillion, via @maxabelson @theterminal
— Lisa Abramowicz (@lisaabramowicz1) April 18, 2022
Which yield curve to watch? All of them.
Currently, only 12% of all yield curves are inverted versus more than 50% before past recessions (shaded columns). pic.twitter.com/PfHbBsdUQn
— Jeffrey Kleintop (@JeffreyKleintop) April 18, 2022
What Pessimists Might Point To
Goldman Sachs’ Jan Hatzius puts the odds of a U.S. recession at about 35% over the next two years. https://t.co/pJg5OreVJt
— Lisa Abramowicz (@lisaabramowicz1) April 18, 2022
A good read from @Jon Hilsenrath and @NickTimiraos highlighting the cost of the #Fed being so late
"During the past 80 years, the Fed has never lowered #inflation as much as it is setting out to do now—by 4 percentage points—without causing recession"https://t.co/Js9Fj6rk6h@wsj pic.twitter.com/xijorV4sKc— Mohamed A. El-Erian (@elerianm) April 19, 2022
As expected, the @WorldBank revised down its 2022 global growth forecast to 3.2%, down from January's 4.1% projection
I strongly suspect that this forecast will be revised down again in the months ahead.
Look also for downward revisions in the #IMF world economic outlook#economy— Mohamed A. El-Erian (@elerianm) April 18, 2022
It’s a very deceiving rise though. Most analysts wait until co’s report & guide to adjust their ests. So there are very few revisions right now. That said, about 25-30 oil & gas co’s in the $SPY had their ests revised upwards this past week. Thats why the overall ests have risen. https://t.co/HIyD7U0W7a
— The Earnings Scout (@EarningsScout) April 16, 2022
#Negative #earnings revisions are being hidden by the #upward revisions to #energy.
h/t @thedailyshot pic.twitter.com/EGtTDzFEAU— Lance Roberts (@LanceRoberts) April 14, 2022
“we think the positive effects of inflation on earnings growth have reached their peak and are now more likely to be a headwind to growth, particularly as inflation forces the Fed to remain max hawkish”
Morgan Stanley pic.twitter.com/cgFHNaf5ww
— Jonathan Ferro (@FerroTV) April 18, 2022
If #inflation pressures remain for #persistant than expected, #profitmargin estimates will likely need to come down. @RealInvAdvice @thedailyshot pic.twitter.com/EqiTIMdl1y
— Lance Roberts (@LanceRoberts) April 19, 2022
Deceleration in PMI suggests that forward EPS growth will decelerate. In other words, current estimates are too high which means buying stocks today based on forward P/E ratios is likely wrong. pic.twitter.com/S2eNEoZn3y
— Lance Roberts (@LanceRoberts) April 19, 2022
1-mo. guidance ratio (# of above- vs. below-consensus guidance) fell sharply to 0.3x in March, the lowest since Feb 2020 pic.twitter.com/S5VbqTKMLS
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) April 18, 2022
With Shanghai in a near total lockdown, this is a map of the commercial ships currently waiting offshore to be loaded and offloaded of goods; exacerbating global supply chain woes pic.twitter.com/Md6PtpF3VE
— Scott Gottlieb, MD (@ScottGottliebMD) April 18, 2022
#Shanghai subway usage still remains near zero. At this time of the year in 2021, 10.5m people took the Shanghai subway each day. Yesterday, just 1,500 people did. #China #COVID19 #ZeroCOVID pic.twitter.com/WfSWAojV1L
— Exante Data (@ExanteData) April 18, 2022
The homebuilder disconnect: a rates story pic.twitter.com/FiLZMdcEC6
— Global_Macro (@Marcomadness2) April 19, 2022
Cyclicals rolling over vs defensive stocks, an ongoing rotation worth watching. 👀 pic.twitter.com/nXonmWecrq
— Markets & Mayhem (@Mayhem4Markets) April 16, 2022
Home Builders Market Index from @NAHBhome slipped in April to 77 vs. 77 est. & 79 in prior month … per chief economist Robert Dietz, housing market faces inflection point as rise in interest rates, home prices & materials’ costs has significantly hurt affordability pic.twitter.com/W0ypLOA5Qr
— Liz Ann Sonders (@LizAnnSonders) April 18, 2022
Big retail sales numbers this morning, but YoY comparisons slowing meaningfully.
Looks like the demand side is slowing faster now with energy price surge and rising rates. pic.twitter.com/r4uhD9YYXy
— Cullen Roche (@cullenroche) April 14, 2022
🇺🇸Spending more cautiously & paying more
🟢Retail sales +0.5% in March
⚠️Adjust. for inflation -0.7%🟡Core -0.1%
Gas +8.9% (higher prices/lower vol)
Merch +5.4%
Elec +3.3%
Sports +3.3%
Cloth +2.6%
Rest/bars +1.0%
Food +1.0%
Furn +0.7%
Build mat +0.5%
Autos -1.9%
Online -6.4% pic.twitter.com/OL0x4WEX9D— Gregory Daco (@GregDaco) April 14, 2022
"Real" Retail Sales declined 0.7% M/M in March.
This puts the trending growth rate of real consumption at +0.7% on a six-month annualized basis.
Real consumption growth is declining (direction), below "trend", and a fraction away from contraction. pic.twitter.com/kOCYzPP43T
— Eric Basmajian (@EPBResearch) April 14, 2022
Charts of the Week
Natural gas futures going parabolic again and have spiked to highest since 2008 pic.twitter.com/QkHeVF3dYB
— Liz Ann Sonders (@LizAnnSonders) April 19, 2022
$TLT just had a -14% over past 30 days.
Historical probability of that is 0.20%
wowzas
— Teddy Vallee (@TeddyVallee) April 18, 2022
The total global bond market value has been tumbling. pic.twitter.com/vN3jfERgQb
— Lev Borodovsky (@thedailyshot) April 18, 2022
If the year ended today, it would be the worst in history for the US Bond Market with a loss of 8.5%.
Entering the year, the 2.9% decline for bonds in 1994 was the largest ever. pic.twitter.com/HF1M8lWbgU
— Charlie Bilello (@charliebilello) April 15, 2022
The Bloomberg US Treasury Index peaked 423 days ago on Aug 4, 2020. Since then, it's down 11.2%–biggest drawdown for bonds going back to 1973. pic.twitter.com/0SJD8AfH1h
— Liz Young (@LizYoungStrat) April 14, 2022
As expected, slowing demand for big ticket items vs. rising demand for services pic.twitter.com/eZAbKHFi3d
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) April 18, 2022
"Consolidated system pricing crossed above 2019 levels" – BofA on airline tickets pic.twitter.com/ODECqvfPm3
— Sam Ro 📈 (@SamRo) April 18, 2022
And I thought the US housing prices were bad Christ pic.twitter.com/oTk1i4fz0S
— Lucas 🧡 (@LucasOfSunshine) April 8, 2022
China's retail trade declined by 3.5 percent year-on-year in March, compared with market expectations of a 1.6 percent fall and after a 6.7 percent gain in the prior period.
Except GDP… all other indicators show contraction. pic.twitter.com/E97G6KyTSV
— Daniel Lacalle (@dlacalle_IA) April 18, 2022
The worst month EVER in the UN food price index was March-2022 pic.twitter.com/HiPql19vxr
— AndreasStenoLarsen (@AndreasSteno) April 16, 2022
The selloff in higher-rated U.S. corporate debt has been unprecedented. Yields on the debt have surpassed 4%, rising to the highest levels since March 2020 & getting close to post-2011 highs. pic.twitter.com/ppwej3lgPW
— Lisa Abramowicz (@lisaabramowicz1) April 19, 2022
And the conversation shifts to whether the Fed is going quickly enough, if hawkish talk has been enough, with 2-year yields getting another pop to a new post-2019 high: pic.twitter.com/SIDVinSEcS
— Lisa Abramowicz (@lisaabramowicz1) April 19, 2022
Longer-term inflation expectations keep rising, with a measure of expected inflation over the next 5-10 years climbing to a new post-2014 high: pic.twitter.com/h43wX05fw8
— Lisa Abramowicz (@lisaabramowicz1) April 18, 2022
US inflation-adjusted bond yields are on the verge of turning positive for the first time since March 2020 https://t.co/LfK2dgXHa2 @FinancialTimes @EricGPlatt pic.twitter.com/8iDegCymTe
— Colby Smith (@colbyLsmith) April 19, 2022
The 30-year yield is this close to breaking 3% https://t.co/keAFkKPXGK pic.twitter.com/Wan2p2igHm
— Joe Weisenthal (@TheStalwart) April 19, 2022
GERMAN 🇩🇪 STAGFLATION pic.twitter.com/Kxr1WAeNLo
— Win Smart, CFA (@WinfieldSmart) April 19, 2022
Disclosure
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