The U.S. labor market was a shining star in 2022 against a dim economic backdrop of tighter financial conditions and recession fears. Although real GDP normally outpaces payroll employment, due to rising labor productivity, payrolls grew more rapidly than real GDP growth in 2022.
2022 was a difficult year for the public markets, as positive stock-bond correlations offered investors little to no protection against the macroeconomic backdrop of persistently high inflation, hawkish monetary policy and heightened geopolitical tensions.
This week, investors will gain further clarity on whether the recent inflation downtrend is sticking and the Fed’s timing on a policy pivot.
Headlines have been dominated by the better-than expected October CPI report, but this improvement in inflation will likely be overshadowed by a deteriorating growth outlook in the coming months.
As Americans head to the grocery store this week to stock up on ingredients, they may be frustrated to discover that the cost of a Thanksgiving dinner is a whopping 20% higher than last year…
After peaking at 9.1% y/y in June, inflation has slowly been receding.
The October Jobs report saw a stronger-than-expected gain of 261,000 non-farm payroll jobs.
With over half of the market reporting, our current estimate for 3Q22 S&P 500 operating earnings per share (EPS) is $52.42. If realized, this would represent y/y growth of 0.8% and q/q growth of 11.9%.
As the U.S. Federal Reserve continues to aggressively tighten monetary policy, the average 30-year mortgage rate has skyrocketed to a two-decade high of 6.94%.
Following a string of upside surprises, the September CPI report dashed hopes for a deceleration in inflation.
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