“Something that everyone knows isn’t worth anything.” ― Bernard Baruch

1. Single Dose of Omicron-Targeting Vaccines to Become Main Covid-19 Shot in U.S. — the Food and Drug Administration also authorized a second booster of the updated shots for people at high risk of Covid-19, specifically people 65 years and older or people who have weak immune systems.
The agency’s actions mark the latest tweaks to Covid-19 vaccines, and could be followed up by further efforts to simplify the complicated vaccination regimen, perhaps by enshrining plans for a once-a-year shot for most people.
2. Home Prices in March Posted Biggest Annual Decline in 11 Years — U.S. existing-home sales decreased 2.4% in March from the prior month to a seasonally adjusted annual rate of 4.44 million, the National Association of Realtors reported. March sales fell 22% from a year earlier. March marked the 13th time in the previous 14 months that sales have slowed. The housing market had a surprisingly strong February, when sales rose a revised 13.75% from the previous month. But after mortgage rates ticked higher, March sales resumed the extended period of declines.
3. Auto Dealers Feel the Squeeze — AutoNation said late last week that on a same-store basis, it sold 2.8% fewer new vehicles and 17.5% fewer used cars in the first quarter compared with a year earlier. Lithia LAD -0.08%decrease; red down pointing triangle Motors on Wednesday said it sold 6.3% fewer new vehicles and 2.4% fewer used vehicles over the same period. Cars are sitting on lots for longer as a result: Lithia said there were about 52 days of supply of new vehicles in the first quarter, up from 47 days a quarter earlier. AutoNation is carrying 25 days’ worth of new vehicle supply, up from 19 days from the prior quarter. Rising rates aren’t only a problem when it comes to selling cars. With so many more of them idling on lots, rising interest rates are adding up to higher floor plan financing expenses, eroding profits: Lithia Motors and AutoNations’ floor plan interest expenses last quarter were more than five times what they were a year earlier.
4. U.S. Begins Planning for 6G Wireless Communications — the White House will meet with corporate, government and academic experts to begin developing goals and strategies for the new 6G communications technology, which would have the ability to take cloud computing and the mobile internet to true global ubiquity, among other improvements.
The next generation of telecom is still years away from deployment, but it could pave the way for global internet access still unavailable with the current 5G standard, which makes smartphone downloads and wireless hot-spot connections faster. Expanding access to the internet has been a priority for the Biden administration as part of its infrastructure

The week ahead — Economic data from Econoday.com:

“Do more of what works and less of what doesn’t.” — unknown

1. U.S. Inflation Eased to 5% in March — the consumer-price index, a closely watched inflation gauge that measures what consumers pay for goods and services, rose 5% last month from a year earlier, down from February’s 6% increase and the smallest gain since May 2021, Consumers saw lower prices last month for groceries, gasoline, medical care and utilities and high prices for shelter, airline fares and insurance, the department said. Core prices, a measure of underlying inflation that excludes volatile energy and food categories, increased 5.6% in March from a year earlier, accelerating slightly from 5.5% the prior month. Core inflation, which economists see as a better predictor of future inflation, has stayed stubbornly high in part because of inflationary pressures from shelter costs.
2. I Bonds Lose Their Luster With Yield Set to Plunge Below 4% — yields on the popular Series I savings bonds are set to slump after a key measure of inflation showed signs of softening on Wednesday. Just a few months ago, they offered an historic 9.62% rate. Now that figure is expected to fall to 3.8%, putting the return closer to what you can get on certificates of deposit, high-yield savings accounts and money-market funds. Low-risk, inflation-linked I bonds soared in popularity over the past two years as investors looked for ways to shield their cash from rising prices. In the 15-month stretch beginning in November 2021, when I bond rates rose above 7% for the first time since 2000, sales topped $40 billion, according to the US Treasury Department.
3. US Producer Prices Fell in March by Most Since Start of Pandemic — the producer price index for final demand decreased 0.5% from a month earlier, according to data out Thursday from the Bureau of Labor Statistics. The figure was below all estimates in a Bloomberg survey of economists. The PPI slowed on an annual basis, rising 2.7% from a year ago, the smallest gain in more than two years.
Excluding the volatile food and energy components, the so-called core PPI fell 0.1% from February and increased 3.4% from a year ago. Most of the monthly decline in the overall PPI was due to goods, with 80% of that decrease tied to a drop in gasoline. Margins for machinery and vehicle wholesaling were a major factor in the 0.3% slide in services costs. Those prices slid by the most since April 2020.
4. Retail Sales Fell in March — Shoppers pulled back on purchases of items such as vehicles, furniture and appliances amid climbing interest rates. Overall purchases at stores, restaurants and online declined a seasonally adjusted 1% in March from the prior month, the Commerce Department said Friday. Consumers also spent less on gasoline, reflecting a downward trend in prices. Manufacturing output, which is also sensitive to interest rates, declined 0.5% in March from the prior month, and is down from a year earlier, the Fed said in a separate report Friday. And after a strong start to the year, hiring has eased for two straight months and the number of job openings has declined, signs the red-hot labor market is also cooling.

The week ahead — Economic data from Econoday.com:

‘Every morning in Africa, a gazelle wakes up; it knows it must run faster than the fastest lion or it will be killed.” — Leon Cooperman

1. U.S. Job Openings Dropped in February — the number of job openings fell in February, dropping below 10 million for the first time in nearly two years in a sign that employers’ demand for workers eased amid a still strong labor market. That fits the overall picture of a solid but slightly cooler labor market in February. Employers added 311,000 jobs—fewer than in January but a still robust gain—while the unemployment rate edged higher but remained low at 3.6%.
“We’re finally seeing companies cutting back their openings, which is the first step towards easing the tightness of the labor market,” said Lightcast Senior Economist Ron Hetrick. “This could be what a soft landing looks like in today’s economy.”
2. US Service Gauge Falls More Than Expected as Demand Moderates — The group’s index of new orders at service providers dropped more than 10 points to a three-month low of 52.2. While still consistent with expansion, the scale of the drop suggests a significant slowing in the pace of bookings growth. The business activity measure, which mirrors the ISM’s factory production index, slipped to 55.4. “There has been a pullback in the rate of growth for the services sector, attributed mainly to a cooling off in the new orders growth rate, an employment environment that varies by industry and continued improvements in capacity and logistics,” Anthony Nieves, chair of the ISM Services Business Survey Committee, said in a statement.
3. Fed’s Emergency Loans to Banks Fall, But Remain High — Banks once again reduced their borrowings from two Federal Reserve backstop lending facilities in the most recent week, a sign the financial stresses that emerged following a string of bank collapses last month may be stabilizing. Emergency borrowing retreated for the third straight week, suggesting liquidity demand continues to ease following the second-largest bank failure in US history. Over the past few weeks, banks appear to have shifted a larger share of their borrowing out of the discount window, the Fed’s traditional backstop lending program, and into the new emergency lending facility it launched last month to help stem contagion in the bank sector.
4. March Jobs Report Shows Hiring Gradually Cooling — Employers added 236,000 workers last month, a historically strong gain but the smallest in more than two years, the Labor Department reported. The unemployment rate ticked down to 3.5%. More Americans jumped into the labor market in March, helping take pressure off wage increases. Average hourly earnings rose 4.2% last month from a year earlier, the smallest annual gain since mid-2021 when inflation was surging.
Steady hiring growth last month could keep the Federal Reserve on track to consider raising interest rates again at its meeting in early May. But slower wage gains could also allow officials to hint at a pause after that. Fed officials have signaled they will pay close attention to other measures of economic activity including bank lending conditions as they debate their next move.

The week ahead — Economic data from Econoday.com:

Sir John Templeton: “Bull markets are born on despair, grow on skepticism, mature on optimism and die on euphoria.”

1. Consumer Spending Growth Moderated in February and Core Inflation Eased — Consumer spending increased a seasonally adjusted 0.2% in February, from January’s revised 2% increase, which was the largest one-month gain in nearly two years, the Commerce Department said Friday. When adjusted for rising prices, spending fell 0.1% in February from the prior month, after rising a revised 1.5% in January.
The core personal-consumption expenditures price index—one of the Fed’s preferred gauges of inflation—climbed 4.6% in February from a year earlier, down from 4.7% the prior month. Many economists see the core measure, which omits volatile food and energy prices, as a better predictor of future inflation.
2. White House Calls for Tougher Midsize Bank Rules — The recommendations call for new rules from the Federal Reserve and other banking regulators that would apply to banks with $100 billion to $250 billion in assets. There were approximately 20 firms in that asset range as of the end of 2022, according to the Federal Financial Institutions Examination Council.
The Fed is already rethinking a number of its rules related to those banks after Silicon Valley Bank and Signature Bank failed. Changes could include tougher capital and liquidity requirements, as well as steps to strengthen stress tests that assess banks’ ability to weather a hypothetical severe downturn.
3. New EV Rules Mean Fewer Models Eligible for Tax Credit — The new rules, issued by the Treasury Department Friday, aim to make the U.S. less reliant on batteries and critical minerals shipped from China. For car buyers to claim the full $7,500 tax credit, the batteries must contain set amounts of components made in North America and critical minerals sourced in the U.S. or from certain friendly countries.
The criteria will take effect on April 18, when a list of models that qualify for the tax credit will be issued. Until then, consumers can claim the full tax credit when they buy vehicles that are currently eligible, before some are expected to drop off the list.
4. Nasdaq turns in best performance since 2020 — The S&P 500 rose 7% in the first quarter, while the Dow Jones Industrial Average added 0.4%. The Nasdaq Composite soared. The technology-heavy index jumped 17%, outperforming the Dow industrials by the widest margin since 2001. Overall, it was Nasdaq’s best quarter since the second quarter of 2020. Recent projections show Fed officials expect the federal-funds rate to rise to at least 5.1% from its current range of 4.75% to 5%. That suggests the Fed could push through one more quarter-point interest-rate increase and then hold rates at that level for the remainder of the year.

The week ahead — Economic data from Econoday.com: