There will not be any re-cap for the week of Feb 19 through Feb 23, 2024. We are away for some needed R&R.

The staffs at EGS.

The week ahead — Economic data from Econoday.com:

“Hope is [a] bogus emotion that only costs you money.”

1. Inflation at 3.1% Reflects Stubborn Pricing Pressure, Clouding Outlook for Fed Rate Cuts — the Labor Department reported Tuesday that consumer prices rose 3.1% in January from a year earlier, versus a December gain of 3.4%. That marked the lowest reading since June. Still, the consumer-price index was higher than the predicted 2.9%, a disappointment for investors who hope the Fed will cut rates sooner rather than later. Rate cuts tend to help stock prices by boosting economic activity and reducing competition from bonds for investor dollars. But Tuesday’s inflation report underscores why Fed officials have been dismissive of such expectations, and it could provide ammunition to officials who want to wait until the middle of the year before cutting interest rates. Some Fed officials have suggested that the pace of improvement over the past six months might overstate underlying progress in containing price pressures.
2. US Producer Prices Increased by More Than Forecast in January — the producer price index for final demand increased 0.3% from December, Labor Department data showed Friday. The gauge rose 0.9% from a year earlier, also exceeding forecasts. The so-called core PPI, which excludes volatile food and energy categories, climbed 0.5% from the prior month, and 2% from a year ago — both topping expectations. The advance reflected increases in services categories, including hospital outpatient care and portfolio management.
3. Housing starts post sharpest drop since April 2020 — housing starts fell to a 1.33 million annual pace from 1.56 million in December, the government said Friday. That’s how many houses would be built over an entire year if construction took place at the same rate every month as it did in January. Housing starts fell to the lowest level since August 2023.
The drop in January was the sharpest since April 2020, during the coronavirus pandemic, when starts fell by nearly 27%. Not including that pandemic drop, housing starts fell by the most since 2015.
4. New OpenAI Technology Can Create Realistic Video From a Line of Text — OpenAI calls the new system Sora. It takes a written prompt and, through AI, renders a richly detailed video. OpenAI is one of many companies like Alphabet’s Google and Meta Platforms seeking to capitalize on new AI-video developments. Microsoft-backed OpenAI, maker of the ChatGPT AI chatbot, said it is sharing the text-to-video technology with a select group of researchers and academics who will study it to find ways the AI program could be misused. It hasn’t been released to the public. OpenAI previously released a program called Dall-E 2 that produces still images based on text descriptions.

The week ahead — Economic data from Econoday.com:

“Trading is very competitive and you have to be able to handle getting your butt kicked.” — unknown

1. Biden Administration Explores Raising Tariffs on Chinese EVs — Biden administration officials, long divided over trade policy, have left in place Trump-era tariffs on roughly $300 billion of Chinese goods. But officials at the White House and other agencies are debating the levies again, the people said, with an eye on wrapping up a long-running review of the tariffs early next year. Chinese EVs are already subject to a 25% tariff, which has helped prevent subsidized Chinese automakers from making inroads into the U.S. market. Raising that tariff, which comes on top of a 2.5% tariff on auto imports, likely would have little immediate impact on U.S. consumers. Other targets for potential tariff-rate increases are Chinese solar products and EV battery packs, the people said. While the U.S. now primarily imports solar material from Southeast Asian countries, China is still an important supplier of EV batteries.
2. In China, Deflation Tightens Its Grip — the latest data suggest China faces a growing risk of slipping into a longer-term spell of falling prices that becomes harder to reverse the longer it lasts. That presents a special challenge for the rest of the world. While cheaper goods from China might help ease inflation elsewhere, it means the global economy can also expect a flood of cut-price imports as Chinese factories search out buyers overseas for products they can’t sell at home. That risks squeezing other countries’ domestic manufacturing, stoking already acute tensions over trade between China and the U.S.-led West. China’s sinking prices add to a litany of economic challenges in the country this year. Growth is projected to slow from last year’s underwhelming pace. A drawn-out real-estate crunch is throttling consumer spending, with China Evergrande Group—the poster child for the sector’s woes—ordered into liquidation by a Hong Kong court. Exports are struggling and foreign investors are fleeing. Beijing on Wednesday replaced the country’s top securities regulator after an epic stock-market rout.
3. S&P 500 Tops 5,000 — the S&P 500 closed at a record level on Friday, finishing above 5,000 for the first time ever as investors looked to next week’s inflation data for a confirmation of easing price pressures. So far this year, investors have largely focused on the positive signs for markets: Economic data, including the latest readings on labor and gross domestic product, have boosted hopes that the Federal Reserve monetary policy actions won’t hamper growth. Recent earnings results from Palantir Technologies and IBM have also lifted hype about artificial intelligence. These themes have carried the S&P 500 upwards in 14 out of the past 15 weeks–something which hasn’t happened since 1972.

The week ahead — Economic data from Econoday.com:

“If you can learn to create a state of mind that is not affected by the market’s behaviour, the struggle will cease to exist.” -Mark Douglas

1. Job Quitting Fell 12% Last Year — workers called it quits less frequently in 2023, a sign confidence in the labor market is falling as the U.S. economy is expected to slow and Americans are taking longer to find new jobs. Americans quit 6.1 million fewer jobs last year than in 2022—a decline of 12%, the Labor Department said Tuesday. In December alone, quits fell to the lowest monthly level in nearly three years, after adjusting for seasonal fluctuations. In more recent months, prospective job seekers have seen news of high-profile layoffs, smaller pay bumps and sharp slowdowns in hiring in certain industries. Those pockets of weakness stand in contrast to years of consistent overall job growth and a historically low 3.7% unemployment rate at the end of last year.
2. Private payroll growth slowed to just 107,000 in January, below expectations — Private payroll growth declined sharply in January, a possible sign that the U.S. labor market is heading for a slowdown this year, ADP reported Wednesday. Companies added 107,000 workers in the first month of 2024, off from the downwardly revised 158,000 in December and below the Dow Jones estimate for 150,000, according to the payrolls processing firm. Leisure and hospitality posted the biggest increase, with an addition of 28,000 workers, while trade, transportation and utilities added 23,000, and construction rose by 22,000. Services-providing companies were responsible for 77,000 jobs, with goods producers adding the rest.
3. Fed Keeps Rates Steady While Powell Says March Cut Unlikely — the Federal Reserve held interest rates steady for a fourth straight meeting and signaled an openness to cutting them, though Fed Chair Jerome Powell threw cold water on investors’ hopes that reductions would begin in March. The central bank’s policy-making Federal Open Market Committee showed it is in no rush to reduce rates, noting in a statement Wednesday that it “does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.” While Powell acknowledged the dramatic inflation progress seen in recent months, he repeatedly emphasized the need to see “more” data confirming that downward trend. Powell spoke just after the Fed issued a statement following their two-day meeting, where officials dropped their previous assertion that a rate hike was possible and instead adopted a more even-handed assessment of the future policy path.
4. January hiring was the lowest for the month on record as layoffs surged — the report follows news Wednesday from ADP that private payrolls increased by just 107,000 for the month. On Friday, the Labor Department will be releasing its nonfarm payrolls count, which is expected to show growth of 185,000. The job outplacement firm said planned layoffs totaled 82,307 for the month, a jump of 136% from December though still down 20% from the same period a year ago. It was the second-highest layoff total and the lowest planned hiring level for the month of January in data going back to 2009.
5. Jobs Growth of 353,000 Blasts Past Expectations as Labor Market Stays Hot — employers added 353,000 jobs last month, the Labor Department reported Friday. That was the strongest in a year and nearly double what economists surveyed by The Wall Street Journal expected. December’s payroll gains were also revised upward to 333,000 from 216,000, further undercutting the widely held view among economists and investors that it was becoming harder to find a job.
The unemployment rate in January held steady at 3.7% instead of rising to 3.8% as economists had forecast. Wages outpaced expectations, jumping 4.5% last month from a year earlier, though the large increase may have reflected a big drop in hours worked—a possible result of bad winter weather, some analysts said.

The week ahead — Economic data from Econoday.com: