Now, I want to bring in Rob Haworth 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, 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 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 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 it 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 easing somewhat in terms
of the stress there. I think the next key
data point we'll look at is 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 --> .