June 8, 2022
Market Performance (YTD)
Source: YCharts
Disclaimer: Past performance is no guarantee of future performance
The peak inflation argument is peaking up steam
Supply chains are still troubled but showing signs of easing
Supply chain bottlenecks improved in April yet remained significantly underwater, the RSM US Supply Chain Index shows. Learn more from RSM U.S. economist @tuannguyen0709. https://t.co/LCDq6KQmYK pic.twitter.com/mRLNnWVars
— victorkao (@victorkao4) June 3, 2022
ISM services backlog of orders with a huge drop last month.
Down 7.4 points to 52 is the 4th largest monthly decline ever.
A clue supply chains are improving? pic.twitter.com/ENDCK7InqJ
— Ryan Detrick, CMT (@RyanDetrick) June 3, 2022
Supply chains are improving and Inventory is normalizing https://t.co/c41CBa27au pic.twitter.com/tHyzaOqy5G
— The Transcript (@TheTranscript_) June 6, 2022
Retail companies are seeing inventory buildups, a deflationary problem
$TGT -3.5% in premarket
*TARGET SEES 2Q OPER MARGIN ABOUT 2%, SAW WIDE RANGE AROUND 5.3%
*TARGET PLANS 'PRICING ACTIONS' TO CUT HIGH TRANSPORTATION COSTS
*TARGET ACTIONS INCL REMOVING EXCESS INVENTORY, CANCELING ORDERS
*TARGET FOCUSED ON INVENTORY OPTIMIZATION— Kailey Leinz (@kaileyleinz) June 7, 2022
And inventory problems are almost never resolved in a Q. These teams were ordering aggressively for a while. So intra-Q discounting only clears what’s on the shop floor, not what’s in warehouses or on ships… https://t.co/WtenXyDRwd
— Rahul Sharma (@Retail_Guru) May 31, 2022
Quite the shift over the past year in inventories’ contribution to GDP growth … latest estimate from @AtlantaFed GDPNow has them subtracting 1.5% from 2Q22 growth pic.twitter.com/JEHLTglnRC
— Liz Ann Sonders (@LizAnnSonders) June 7, 2022
And the slowing economy is already making a dent in expectations
Citi U.S. Inflation Surprise Index (blue) has rolled over considerably from its peak; and at same time, financial conditions (orange) have tightened at a rather rapid pace pic.twitter.com/ZFJC0WKSLK
— Liz Ann Sonders (@LizAnnSonders) June 2, 2022
But energy prices continue to be a concern
“If we continue consuming, with the pace of consumption we have, we are nowhere near the peak, because China is not back yet. .. China will come with more consumption.”
(h/t @JohnSpall247) #UAE #OOTT pic.twitter.com/UjecJzOARW
— Carl Quintanilla (@carlquintanilla) June 8, 2022
"Calls that US inflation has peaked may be premature. Surging energy and food prices means high risk that inflation surpasses March's 8.5% sometime this summer:" @economics pic.twitter.com/kJ4hVFwOzJ
— Lisa Abramowicz (@lisaabramowicz1) June 8, 2022
New Goldman Sachs oil price targets 👀 pic.twitter.com/jFUdVCGwCi
— Jonathan Ferro (@FerroTV) June 7, 2022
Although definitely slowing, the economy is still holding in there
Consumers are still spending
Hotels 🏨 pic.twitter.com/hGlS7L3Wlj
— Win Smart, CFA (@WinfieldSmart) June 7, 2022
NO SIGNS OF COOLING HERE
From today's @markets newsletterhttps://t.co/Pl5nZqsNJq pic.twitter.com/epDZzlb9Rx
— Joe Weisenthal (@TheStalwart) June 7, 2022
$V:"I know there's a lot of talk of slowdowns and so on..but if you look at the data, at least through 28th of May, the consumer was essentially spending at the same level as they were in April& actually prior to April because the trend has been in that range for quite a while" https://t.co/9mnmkEEE4v
— The Transcript (@TheTranscript_) June 3, 2022
$DAL: "The demand has been phenomenal for the industry and especially for Delta. We're going to wind up with, in the second quarter of this year, total revenues restored to where we were in 2019 second quarter despite the fact that we only have 82% of our seats in the market"
— The Transcript (@TheTranscript_) June 3, 2022
Airlines are all raising revenue guidance.
— Conor Sen (@conorsen) June 3, 2022
The Payrolls report came in better than expected
Payrolls: 390k vs est 318k
Unemployment: 3.6% vs est 3.5%
Earnings YoY: 5.2% vs est 5.2%
Participation rate: 62.3% vs est 62.3% https://t.co/HAorplXKao— Jonathan Ferro (@FerroTV) June 3, 2022
Jobless claims have improved two weeks in a row pic.twitter.com/gVI7cqo9LX
— Joe Weisenthal (@TheStalwart) June 2, 2022
🧵1/ May’s @LinkedIn Hiring Rate data was quite different from what I anticipated. Despite all those glum headlines, overall US hiring was up 0.4% M/M. It’s up 10% relative to pre-COVID; has changed much since late spring 2021. Hot, but not heating up further nor cooling down. pic.twitter.com/jNQedy1PXE
— Guy Berger (@EconBerger) June 2, 2022
And estimates are still holding strong for now
Earnings will determine where stocks go from here, so, how's the outlook? Earnings growth is clearly slowing, but it’s still positive. Only emerging markets earnings are contracting. pic.twitter.com/r3wUf05Ixa
— Jurrien Timmer (@TimmerFidelity) June 1, 2022
Manufacturing PMIs in major economies. This shows that PMIs remain mostly in expansion despite the evident slowdown. pic.twitter.com/YpxUCGyKaI
— Daniel Lacalle (@dlacalle_IA) June 1, 2022
And now the gloomy stuff
$JPM CEO Jamie Dimon: A hurricane is coming:
"I said there's storm clouds, they're big storm clouds, it's a hurricane…right now it's kind of sunny, things are doing fine, everyone thinks the Fed can handle this. That hurricane is right out there down the road coming our way" pic.twitter.com/Wrdv88g4gC
— The Transcript (@TheTranscript_) June 1, 2022
$GS COO John Waldron on the recession:
"I'm going to try not to use any weather analogies, but I would say..this is among, if not the most complex dynamic environment I've ever seen in my career…the confluence of the number of shocks to the system, to me, is unprecedented" pic.twitter.com/xmgaokpLrL
— The Transcript (@TheTranscript_) June 2, 2022
Missed in the Dimon "hurricane" hubbub was $WFC forecasting job cuts in the coming months. (via @TheTranscript_ and @SPGMarketIntel) pic.twitter.com/sZeXfH2y0U
— Myles Udland (@MylesUdland) June 6, 2022
Stocks suck.
Bonds are terrible.
So it makes sense that the general U.S. consumer has never been more pessimistic about prospects for the two markets.
Ever. pic.twitter.com/sWeyyGNo1L
— SentimenTrader (@sentimentrader) June 2, 2022
The @AtlantaFed GDPNow estimate for Q2 continues to slide, now at just +0.9%. US economic momentum appears to be slowing.$SPY $XLY pic.twitter.com/nqzl1k6b8e
— DataTrek Research (@DataTrekMB) June 8, 2022
World Bank President: "…the world economy…is facing high inflation and slow growth at the same time. Even if a global recession is averted, the pain of stagflation could persist for several years…For many countries, recession will be hard to avoid" pic.twitter.com/ddZyXvbctG
— The Transcript (@TheTranscript_) June 8, 2022
How is US consumer spending holding up despite inflation outpacing wage gains for 13 straight months?
1) Americans are saving less: 4.4% savings rate at lowest levels since 2008.
2) Americans are borrowing more: 7.5% increase in credit over the past year is largest since 2011. pic.twitter.com/ju40ZRsLLg
— Charlie Bilello (@charliebilello) June 8, 2022
Great chart this morning from @R_Perli & team.
We are experiencing the fastest monetary policy tightening cycles in modern history.#Fed forward guidance is a powerful tool! pic.twitter.com/r6eYElqLea
— Matthew Miskin, CFA (@matthew_miskin) June 7, 2022
Probability of a U.S. recession (based on 2s10s yield curve per @Economics) has risen to highest since February 2007 pic.twitter.com/SbyzLLspJh
— Liz Ann Sonders (@LizAnnSonders) June 2, 2022
The biggest risk for Equities is no longer valuations – but the outlook for earnings – even US CEO's are now indicating the kind of conditions that in the past have seen earnings recessions… pic.twitter.com/owEaAtV5Nb
— Ian Harnett (@IanRHarnett) June 5, 2022
One area of concern in the US jobs report was an uptick in part-time employment for “economic reasons.” pic.twitter.com/ehr3QXqKzg
— (((The Daily Shot))) (@SoberLook) June 6, 2022
"We think we might be coming to the end of the ultra-low default world. First, we will likely have a cyclical US recession to address in 2023, and after that, a risk of the reversal of trends that have made the last 20 years so subdued for defaults:" DB's Jim Reid pic.twitter.com/YixKQFIoeb
— Lisa Abramowicz (@lisaabramowicz1) June 7, 2022
Valuations are still above past bear market bottoms, but that doesn't mean we'll see a bear in the S&P 500 or fall to previous valuation lows. https://t.co/uOoJt0gEBf via @WSJ pic.twitter.com/Xc24PBbgzF
— Charles Rotblut, CFA (@CharlesRAAII) June 6, 2022
Citi Economic Surprise Index.. tanking pic.twitter.com/zWavFi5iyO
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) June 2, 2022
What’s even more interesting about this tweet is that that inflation peaks hit in the middle of recessions – not before them. So, either we’re in one and we don’t know it (unlikely) OR we’re not really peaking yet (there could be a new leg higher before we fall to zero) https://t.co/aHatC6k1O5
— David Settle, CMT (@davidsettle42) June 6, 2022
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