10 Things You Need to Know: May 16, 2023
Key Data Points
Key data releases this week include: retail sales (Tue), industrial production (Tue), NAHB Housing Market Index (Tue), housing starts (Wed), existing home sales (Thu), and leading economic indicators (Thu).
Haver
May 10, 2023
The Consumer Price Index rose 0.4% in April (4.9% y/y) following a 0.1% uptick in March. A 0.4% increase had been expected in the Action Economics Forecast Survey. Prices excluding food & energy rose 0.4% for the fourth month in the last five. The 5.5% y/y gain was below the 6.6% September high. A 0.3% increase had been expected.
Haver
May 11.2023
The Producer Price Index for final demand rose 0.2% (2.3% y/y) during April after falling 0.4% in March, revised from -0.5%. A 0.3% increase had been expected in the Action Economics Forecast Survey. The PPI excluding food & energy increased an expected 0.2% after holding steady in March. The 3.2% y/y increase was the weakest in two years. A 0.2% rise had been expected.
Barron’s
May 15, 2023
Banks are pulling back sharply on real estate loans amid widespread price declines and weakness in office properties. The National Association of Realtors points to a record-high office vacancy rate of 12.9% compared with the previous year’s 12%. Banks hold about $2.2 trillion in outstanding commercial real estate debt, the Fed said in a recent report.
Barron’s
May 15, 2023
Only six of the 124 fed-funds rate reductions since 1971 occurred with a sub-4% jobless rate; two took place during the worst of the Covid-19 crisis in March 2020, while three happened in 2019 with inflation running below the Fed’s 2% target. The other instance came on Jan. 3, 2001, as the economy was headed toward the recession that followed the dotcom bust.
Barron’s
May 15, 2023
Discretionary investors are heavily underweight the market: Equity exposure is at its lowest level in a year and at only the ninth percentile historically. Many investors are waiting for the market to drop before putting cash to work. But if it breaks higher, they might have to start buying.
Barron’s
May 15, 2023
Longtime Washington watcher Greg Valliere, chief U.S. policy strategist at AGF Investments, thinks that Congress will likely kick the can again on the debt ceiling as default approaches, perhaps until the July 4 recess or even to the end of the current fiscal year on Sept. 30.
Barron’s
May, 15 2023
The rise in gold during a period of higher interest rates should send a warning about U.S. finances and the dollar’s international status. Central banks added 228 metric tons of the metal to their reserves in the first quarter, according to the World Gold Council. That followed a record addition of 1,136 metric tons in 2022, during which China resumed its purchases.
Bloomberg
May 15, 2023
Federal Reserve Bank of Atlanta President Raphael Bostic pushed back against bets in financial markets that the central bank will cut interest rates this year and cautioned against taking further hikes off the table if inflation doesn’t cool. “My baseline case is we won’t really be thinking about cutting until well into 2024,” Bostic said.
Bloomberg
May 15, 2023
Billionaire Paul Tudor Jones said that the Federal Reserve is done raising rates and that stocks will end the year higher even as the economy slows. “I’m not rampantly bullish because I think it’ll be a slow grind,” he said, comparing the period to June 2006, when the Federal Reserve stopped raising rates and stocks rose for another year.