Mid-Week Market Minute 04.13.22

Market Updates

Global stocks took a breather this week as investors continued to monitor geopolitical and inflation risks. On Tuesday, data from the Bureau of Labor Statistics showed headline CPI rose by 8.5% from a year ago, the largest annual gain since 1981. On Wednesday, the producer prices report, which measures prices paid by wholesalers, showed prices rising by 11.2% from a year ago. Stripping out food, energy and trade services, so-called core PPI rose 0.9% monthly, nearly double the 0.5% estimate and the biggest monthly gain since January 2021. This contrasted with core CPI on Tuesday, which came in lower than consensus expectations. As the Fed continues to address inflation, Federal Reserve Bank of St. Louis President James Bullard said this week that monetary policy needs to be tightened to a point that it curtails economic growth or policy makers will end up risking their credibility. He supports a half-percentage-point increase at the Fed’s policy meeting in May and says the rate should move up “sharply” after that (Bloomberg). On the geopolitical front, the presidents of Poland and the three Baltic states are heading to Kyiv in a show of support that follows the visits of other leaders to the Ukrainian capital, including Boris Johnson and European Union leaders. Treasury Secretary Janet Yellen warned governments that are “sitting on the fence” over the international effort to punish Russia and any moves to undermine sanctions would draw the ire of the U.S. and its allies.

First-quarter earnings reporting season kicked off this week, where S&P 500 earnings are expected to increase 4.5%, the lowest growth since the fourth quarter of the pandemic-plagued 2020, according to FactSet. JPMorgan shares fell 3% in premarket trading after the bank reported a 42% decline in first-quarter profits stemming from increased costs for bad loans and market upheavals tied to Russia sanctions. Key earnings for the financial sector will continue this week with Goldman Sachs, Citigroup, Morgan Stanley, and Wells Fargo all reporting.

Source: GSAM, Daily Upside, JPM, FactSet

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