Global equities lost nearly 1% last week. Bond prices also lost ground last week as interest rates rose. Commodity markets, however, gained nearly 4%, led by gains in gold, energy, and copper. For the year, energy prices are up over 20%. Agricultural commodities are also up over 20% for the year. There seems to be increasing evidence that the season has changed in the economy and the markets. Like winter recently giving way to spring, there seems to be growing evidence of the same for expectations about the economy. 

This change in economic expectations included more economic data last week suggesting that the economy remains stronger than expected and that inflation remains stubbornly higher. First, there was the February Personal Income and Consumption report early last week which showed that “Consumers remain healthy, and inflation remains a concern.” Then, last Friday was the positively surprising March Employment Report which revealed much higher job growth than expected and the unemployment rate dropping. Given the recent economic data, it is not surprising that there was more Fedspeak last week saying that the Fed will need to see more improvement in inflation before cutting rates. In turn, market expectations according to the CME FedWatch Tool now show probabilities of a 95% chance of another “pause” in rate movements at the May meeting. Earlier this year, the futures market was pricing in 6-7 rate cuts in 2024, but now market expectations are less than 20% for 1%+ of rate cuts by year end. Of course another factor last week for equity weakness and commodity strength was heightened Middle East tension.

Speaking of new seasons, this week is the beginning of the 1Q24 earnings season. Delta Air Lines gets the ball rolling Wednesday, but this Friday is a packed day for leading financial firms’ earnings including BlackRock and JPMorgan. Earnings expectations are for earnings growth of +3.2% from this quarter compared to the first quarter of last year. Current expectations are for growth of nearly 11% for the entire year of 2024. A few notes about earnings expectations though. First, given how earnings seasons usually play out, the current expectations for the quarter currently reporting are likely too low. Companies have often helped guide expectations lower coming into earnings season, which in turn makes it easier to “beat” expectations. Conversely, the expectations for 12 months out tend to be too optimistic. Those higher expectations, however, do help price/earnings valuation ratios using expected earnings look more reasonable.

This coming week will have important inflation data. Current expectations for the Consumer Price Index are for an increase of 3.5% year-over-year, with core (ex-food and energy) coming in at 3.7%. The respective month-over-month numbers are expected to be 0.4% and 0.3%. Neither of those numbers, of course, are tracking 0.2% or less to help get the inflation numbers on track for the Fed’s preferred target of 2%. The Producer Price Index also reports this week.

For long-term investors, we continue to believe it makes sense to build portfolios for All-Seasons Investing perhaps even more so in the current environment. Bottom line…


Stay invested. Stay diversified. Stay disciplined.


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The views expressed herein are exclusively those of Orion Portfolio Solutions, LLC d/b/a Brinker Capital Investments a registered investment advisor, and are not meant as investment advice and are subject to change.
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