Monday Morning Meeting Notes (02/06/2023)

General Info:

• The U.S. Federal Reserve (Fed) raised rates by 0.25%, bringing the fed funds rate to a range of 4.50-4.75%
• Fed Chair Jerome Powell noted that the central bank isn’t ready to declare victory over inflation and that “ongoing increases” in the fed funds rate should be expected
• As we’ve noted for months, we’re much more focused on the length of time in which rates remain restrictive, as we believe they’ll remain elevated for longer than many market participants expect
• The U.S. employment report for January showed 517,000 new jobs added (vs. expectations of 185,000)
• The upside surprise was most likely a function of milder than normal weather distorting the seasonally adjusted data; in addition, the government employee gain of 74,000 was due to the end of a university strike
• The unemployment rate fell to 3.4% (its lowest level since 1969), average hourly earnings rose 4.4% year-over-year, and the labor force participation rate increased from 62.3% to 62.4%
• In addition, JOLTS data showed there were more than 11 million job openings in December, so there are currently 1.93 job openings per unemployed person
• The European Central Bank (ECB) and Bank of England (BOE) each raised rates by 0.50%
• The ECB’s main refinancing rate is now 3.00%, while the BOE’s target rate is now 4.00%
• ECB President Christine Lagarde noted that the central bank knows that they aren’t done raising rates and that they’ll need to move rates to restrictive territory and keep them there
• The U.S. ISM Services PMI data for January moved sharply back into expansionary territory (driven by a significant increase in new orders), while ISM Manufacturing PMI remained in contractionary territory
• Fun Fact: A French postman named Ferdinand Cheval spent 33 years picking up stones while delivering mail, and he used the hardened sandstone to create Le Palais Idéal (“Ideal Palace”) in Hauterives, France. The building was designated a cultural landmark in 1969 to celebrate the self-taught artist and architect

Monday 02/06:

• Activision Blizzard, Take-Two Interactive, Amgen, Simon Property Group, Tyson Foods, Timken, and Pinterest report earnings
• Eurozone retail sales data for December

Tuesday 02/07:

• Linde PLC, Gartner, TransDigm, Crown Holdings, and Compass Minerals International report earnings
• Fed Chair Jerome Powell is interviewed at the Economic Club of Washington
• U.S. President Joe Biden delivers the State of the Union address before Congress

Wednesday 02/08:

• Disney, Uber, Yum! Brands, Annaly Capital Management, Eaton, Mattel, MGM Resorts International, and Wynn Resorts report earnings
• U.S. wholesale inventories data

Thursday 02/09:

• National Pizza Day – 100% chance I’ll be celebrating
• AbbVie, PepsiCo, Philip Morris International, Verisign, Avalonbay Communities, Forward Air Corp, SPS Commerce, and Willis Towers Watson report earnings
• U.S. initial jobless claims and continuing claims data
• China aggregate financing, money supply, and new yuan loans for January

Friday 02/10:

• Newell Brands, Enbridge, Magna International, and Mohawk Industries report earnings
• U.S. University of Michigan consumer sentiment for February (preliminary release)
• U.K. Q4 2022 GDP growth, which is expected to be flat quarter-over-quarter and 0.4% year-over-year
• China producer price index (PPI) and consumer price index (CPI) data for January