Before we bring in our next guest here as you
can see all three major indices. Now putting up
in the green this morning, we have the dow
up about 9/100 of a percent, 31 points here
. S and P 500 up about 1/10 of a
percent with the NASDAQ mostly flat up ever so slightly
. Right now. I want to bring in Rob
a senior investment strategist at us, Bank Wealth Management
. Rob. Welcome to the show. Thanks for
joining us. What's your reaction so far to how
the markets have opened this morning? Uh Yeah.
Thank you for having me. It's great to be
here. Uh It's clearly a quiet morning. We're
really waiting for key headline data in the rest of
the week. We've gotten a little bit of data
this morning from the National Federation of Independent Business,
which kind of affirm that small businesses are struggling a
little bit here still. Uh But we really don't
have the big news that we need to see for
what's upcoming at the May Federal Reserve meeting, which
is how is inflation doing. And I think there's
real concerns that core inflation remains a little elevated and
then Friday, we're really looking forward to the retail
sales report because I think we need a clearer picture
of how is the consumer doing? Are they starting
to come under a little stress and are they halting
their spending or are they going to keep spending?
And does that kind of perpetuate some of the inflation
as we move ahead? So I think the market
is really looking ahead to later in the week.
Yeah, absolutely crucial data. Speaking of, you
know, consumer price index producer price index data coming
out later on this week, what do you expect
? These numbers are going to tell us about inflation
? Yeah, I mean, consensus right now is
about 5.2% for headline inflation, 5.6% for core.
What we're we're really focused on is are we starting
to see some of those core services inflation numbers tick
down? We know there's still more shelter inflation that
needs to come through. Uh There's about a 12
month lag on rising home prices as that works through
core prices. So I think the question uh we're
really looking at is is getting down under those shelter
numbers at core and and our wages kind of continuing
to push up those price indices or is it giving
the fed some room to to really pause as we
see uh as we see the economy slowing. And
last week, we had a bunch of data coming
out about the employment situation here in the US capping
off the week with that Friday jobs report showing that
the nation did add about 236,000 jobs last month.
All things considered showing a slight losing in the job
market. What do you make of that? And
is it enough to get the fed to potentially pivot
its rate hike strategy moving forward? Uh It's probably
not enough yet, but the data we actually keyed
off of last week was the weekly jobless claims that
revision pointed out that uh some of the layoffs we've
seen uh we've heard about especially in the tech sector
are showing up in the jobless claims data. So
, so that really kind of reemphasized that, that
the labor market is maybe easing up somewhat as we
got the Friday's Jobs Report. Um It's not quite
enough in our view for the fed to pause yet
we still think and the market is still pricing for
a quarter point hike here in May. And I
think uh they're thinking about how do they get to
that peak terminal rate and then pause to, to
evaluate uh what rate hikes are doing to the economy
at this point. Now, of course, I
do want to talk about the recent bank failures that
we've seen here in the US regional bank failures like
Silicon Valley Bank and Signature bank as well, but
then also credit suisse, you know, an unrelated
separate issue. Have we seen the full effects of
those yet on the economy is the optimism in this
respect that we started to see around this area warranted
. Yeah, I think we're seeing some signs that
, uh, that some of the stress is abating
. We're particularly looking at what's happening with borrowings at
the Federal Reserve window with some of their emergency programs
. We're seeing those numbers come down a little bit
. So it certainly appears that, uh, that
from the, from the Fed's data, that things
are, are easing somewhat in terms of the stress
there. I think the next key data point we'll
look at is uh later in May we get the
senior Fed loan officer survey. We'll have to see
how much tighter credit conditions get as we get that
survey out and take a look at the economy going
ahead and rob I should also mention that starting on
Friday, we're going to start to see earnings from
big banks like Citigroup and JP Morgan. What are
you expecting that to show us in the aftermath of
the volatility that we've seen in more regional banks here
? Well, I think the key question for us
as we look at at Money Center banks kicking off
earnings is it gives us a nice uh sign of
how the economy was really doing. Uh, are
we seeing uh loan growth at these banks? Are
they having to take larger uh loan loss reserves?
We're gonna look at at all that data for kind
of a sign on how the economy is doing.
Um And, and should give us a good indication
as we head into the rest of earnings season.
Uh Moving ahead. All right, Rob Hayward Senior
Investment strategist at us, Bank Wealth Management. Thank
you so much for joining us this morning.