Chart of the Week
The equity markets bounced from the recent lows. The 23% peak to trough decline in equity markets this year is a similar magnitude to the median fall in the last 12 recessions. A recession is not yet a forgone conclusion, though the likelihood increased. Will earnings follow a similar path?
What We’re Reading
Keeping It Going: A Quick Story About Athletes and Investors – Morgan Housel
The Correction: Just Valuations or Earnings Too? – Fidelity
Here’s Why This Housing Downturn is Nothing Like the Last One – CNBC
Are Commodities an Inflation Hedge or the Opposite? – Financial Times
Podcast of the Week
Why It’s So Hard to Turn Oil Back On – Odd Lots, Bloomberg
Tweet of the Week
The Fed often uses informal communication through the media to trial balloon policies. The Wall Street Journal has been the medium of choice, and author Nick Timiraos has been the person to follow over the last few years. This tweet and the accompanying article may signal the beginning of a change in tone and a pivot for the Fed. Bond yields fell and prices rallied in following this note.
The Past Week
Home sales continued to slow as higher mortgage rates increased costs for homebuyers. Jobless claims continued to edge higher while still being at a relatively low absolute level. The S&P Global PMI (Purchasing Manufacturing Index) continued to trend down. PMI data above 50 still signals an expansion in the economy.
The Week Ahead
A number of data releases will come out next week. The most watched will be the final estimate of GDP for the first quarter, the personal consumption and prices data, along with the ISM (Institute for Supply Management).
Thanks for reading, see you next week!
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