10 Things You Need To Know: February 14, 2023
Key data releases this week include: NFIB Small Business Optimism (Tue), CPI (Tue), retail sales (Wed), industrial production (Wed), NAHB Housing Market Index (Wed), housing starts (Tue), PPI (Thu), and leading economic indicators (Fri).
Trading Economics
February 9, 2023
The number of Americans filing for unemployment benefits rose to 196,000 in the week ending February 4th, from the previous week’s nine-month low of 183,000 and above market expectations of 190 thousand. Still, the latest figure suggested the labor market remained tight, which could contribute further to inflationary pressure in the world’s largest economy.
Bloomberg
February 10, 2023
US consumer sentiment climbed to a more than one-year high in early February. The University of Michigan’s preliminary index of sentiment for the month increased to 66.4 from 64.9 in January. A closely watched gauge of price expectations over the coming year rose to 4.2% from 3.9%, but remained well below levels seen in the first half of last year.
Oxford Economics
February 10, 2023
If Chinese gross domestic product grows 5% this year with the end of Covid restrictions, that would lift global growth to just 1.5%, a gain of 0.2 percentage point compared with our previous forecast.
Nikkei Asian Review, Reuters, FT
February 10, 2023, February 10, 2023, February 12, 2023
Japanese Prime Minister Fumio Kishida will nominate economist and former Bank of Japan policymaker Kazuo Ueda to lead the country’s central bank. Ueda’s nomination comes as a surprise to the global financial community, prompting analysts worldwide to pore through his past statements to gauge his positions. Ueda said Friday that “the Bank of Japan’s current policy is appropriate” and that “monetary easing must continue.”
Barron’s
February 13, 2023
With more than two-thirds of S&P 500 companies having reported fourth-quarter results, just 69% are topping earnings estimates—below their average of 76% over the past four quarters—and by an average of only 1.6%, less than the typical beat amount of 5.3% in the same period, according to Refinitiv. That rate means earnings per share are still set to fall, by some 1.4% year over year, which would be the first quarterly drop since the third quarter of 2020.
Reuters, FT, WSJ
February 8, 2023, February 7, 2023, February 7, 2023
Interest rates in the United States could have further to rise to bring down inflation if it persists at the Federal Reserve’s policy target, Fed Chair Jerome Powell has warned. “I think there has been an expectation that [inflation] will go away quickly and painlessly and I don’t think that’s at all guaranteed. That’s not the base case,” he says. Powell’s remarks follow the release last week of buoyant labor market data.
Bloomberg
February 10, 2023
Philadelphia Fed President Patrick Harker said the odds of the Federal Reserve being able to control inflation without triggering a recession are growing, but that the key interest rate must get above 5% and stay there to ensure price pressures ease. “We need to get above five — we’re really close to that right now — and then pause,” Harker said. “How much above five? We’ll see.”
Reuters
February 8, 2023
The US Treasury Department issued a report warning financial firms of the vulnerabilities of using remote cloud-computing services. Only a few cloud services firms, including Amazon, Microsoft, and Google, tend to be used by the financial services industry. “A large system failure or data breach at one of these [cloud-service providers] could impact multiple financial institutions or U.S. consumers, though there are open questions about the extent of that impact,” the report says.
Bloomberg
February 9, 2023
The Treasury bond yield curve reached its highest inversion since the 1980s at 85 basis points last week. However, that does not mean a worse recession or an imminent slowdown, according to Jim Bianco of Bianco research. “I think what Wall Street’s mistake is, they think that’s March or April. But it could be March or April of ‘24, or it could be June of ’24,” he said.