Stansberry Research

Wednesday Afternoon Market Recap:

Stansberry NewsWire

Wednesday Afternoon Market Recap:

U.S. equity markets finished lower.

Economic Indicators

  • The Producer Price Index ("PPI") reading for December showed a further decrease in costs, down 0.5% from the prior month. This marked the steepest decline in prices since April 2020.
  • December retail sales dropped sharper than expected as consumer spending slowed in the traditionally strong holiday season.
  • Homebuilder confidence for January increased for the first time since December 2021, with officials at the National Association of Home Builders stating that December was likely the index's trough.

Macro Commentary

  • St. Louis Federal Reserve President James Bullard said that the central bank needs to guarantee inflation will remain on a steady path back to its target rate (2%) before it changes monetary policy.
  • The U.S. dollar hit a seven-month low as Fed rate-hike expectations continue to decline.
  • Microsoft (MSFT) announced layoffs of 10,000 jobs, reducing hiring to only critical areas. Bank of America (BAC) implemented a full hiring freeze excluding "vital positions."

Within the S&P 500 Index, all the 11 sectors finished lower...

European equity markets finished mixed.

Economic Indicators

  • The U.K. Consumer Price Index ("CPI") for December eased to 10.5% year over year, but food and beverage prices continued to climb at historically fast rates.

Macro Commentary

  • European Central Bank Governor François Villeroy de Galhau pushed back against the recent reports that the central bank will slow rates hikes after its next meeting.
  • German Finance Minister Christian Lindner said that he believed the region's largest economy would avoid a deep recession this year and maintained a positive outlook for 2023.
  • Europe is expanding wind-power initiatives to diversify away from fossil-fuel energy sources.
  • U.K. Chancellor Jeremy Hunt is expected to reject pressure to change tax policy ahead of the nation's spring budget proposal.

Asian equity markets finished higher.

Economic Indicators

  • The Bank of Japan left monetary policy unchanged following its meeting Wednesday. The central bank's report showed a minor uptick in inflation forecasts.
  • Japanese manufacturer sentiment (Reuters Tankan survey) fell into negative territory for the first time in two years.
  • Taiwan's fourth-quarter gross domestic product shrank unexpectedly and delivered the worst economic output in 13 years. A slowdown in global demand and exports was the primary driver.

Macro Commentary

  • China's Vice Premier Liu He declared that the country has passed peak COVID-19 infections and asserted the nation is returning to normal.
  • The International Monetary Fund signaled upward revisions to the global growth outlook, driven by heavy increases in Chinese production following the country's economic reopening.
  • The Bank of Japan is expected to announce its nominees for the next central bank governor and deputies on February 10, 2023.

(Narratives written as of local market close.)

Asset Snapshot

What we're paying attention to this week...

U.S.

  • Philadelphia Fed Manufacturing Index for January (Th)

Europe

  • Germany – PPI for December (F)

Asia

  • China – One- and Five-Year Loan Prime Rates (F)
  • Japan – CPI for December (F)

(Day of week in parentheses.)

Have a great evening!

C. Scott Garliss and Kevin Sanford