Results: the correction
Jumpy, but going down.
Quick summary:
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Unexpectedly high CPI at 3.5% sparked major market sell-offs last week, interrupted by a brief post-PPI rally on Thursday. We now went through a second week of market declines in 2024, with a nearly 3% drop from recent highs. A correction indeed.
In weeks like that we usually lose money (kangaroo markets, remember?), but last week we came in a slight positive. Our short position from Wed almost got annihilated on Thu, but the Fri sell-off brought it back to green for the week.
Crypto update: Bitcoin halving is coming up on April 19th. This could impact all cryptocurrency prices by impacting BTC supply on the market. Some of it is most likely being already priced in.
More economic data coming up this week (building permits, housing, industrial production, manufacturing index), plus Powell is speaking today at 1pm ET.
Earnings are getting warmed up, so this weekend that will be our focus of attention. And then next weekend we are getting ready for QRA and FOMC. A few exciting trading weeks coming up.
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Last week’s performance
The market was focused on new inflation data last week, reacting strongly to the Consumer Price Index (CPI) and Producer Price Index (PPI) reports. The CPI, rising to an unexpected 3.5% annual rate, and the anticipated PPI figures triggered notable market volatility, including significant sell-offs on Wednesday and Friday, and a brief rally on Thursday.
This marked a continuation of the recent downward trend, with the market now nearly 3% below its peak from two weeks ago. The correction is here, no doubt.
We wrote about that over the weekend, where the main implication was a repricing of Fed rate cuts. Heads up: it’s now down to only one cut anticipated this year (in September).
No wonder markets keep selling off. But will it continue this week? That’s the crucial question.
What we have coming up is a bunch of economic data (building permits, housing, industrial production, manufacturing index), plus Powell is speaking today at 1pm ET.
But even more importantly, we start getting bigger earnings: bank and finance companies (GS, BAC, MS, AXP), health (UnitedHealth), pharma (JNJ), retail (P&G), and a potentially big mover in NFLX on Thursday.
These companies will give us a good signal of what to expect from Q1 earnings all around. More on that over the weekend.
Also, keep an eye on potentially significant shifts in the crypto space with the anticipated Bitcoin halving, which is scheduled to happen on Fri, Apr 19th and is expected to impact cryptocurrency valuations due to reduced coin availability. No idea how the impact will be felt, but there will surely be one.
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