This is The Takeaway from today’s Morning Brief, which you can receive in your inbox every Monday to Friday by 6:30 a.m. ET along with:
An impressive flow of headlines returned to the world of investing this week.
The latest reads on inflation from the Consumer Price Index (CPI) and Producer Price Index (PPI) showed slowing rates of growth. Notably, egg prices continued to pull back, as Yahoo Finance’s Brooke DiPalma reported. Love to see it.
Yet, a consumer sentiment report on Friday that showed inflation expectations ratcheting higher scrambled the inflation outlook. Gas prices that are up 17 cents nationwide from a month ago will do that.
Meanwhile, billionaire Warren Buffett waxed poetic about the investing opportunities in Japan just weeks away from his closely watched Berkshire Hathaway shareholder meeting.
Then there was the start of earnings season with results out of big banks JPMorgan (JPM), Citi (C), Wells Fargo (WFC), Blackrock (BLK), and PNC (PNC). Investors mostly rewarded the quarters despite bank execs warning of economic storm clouds and more fallout from the March industry turmoil that led to the downfall of Silicon Valley Bank and Signature Bank.
“Higher for longer [rates] comes with a lot of other things attached to it, like maybe a recession, stagflation, or lower volumes,” JPMorgan CEO Jamie Dimon told analysts on an earnings call.
And in the end, all three major US stock market indexes finished the week with gains.
All of this feverish activity likely means you missed a few things in markets this week. More on that below!
10 Things You Missed in Markets This Week
1. A financial warning: The Carlyle Group co-founder David Rubenstein told Yahoo Finance Live there is a “hole” in the financial statements of First Republic Bank (video above). He also said he will be interviewing Kim Kardashian soon as part of his popular interview show.
2. Good point on mixed economic data: “The problem for many investors right now is that it’s still possible to construct fairly divergent narratives about the economy depending on which series you look at,” Deutsche Bank’s Jim Reid said.
“On the one hand, an array of leading indicators are pointing to a U.S. recession over the coming year, in line with our own house view at Deutsche Bank Research,” Reid added. “But if you wanted to take the opposite view, you could point to unemployment around its lowest in decades, a high level of vacancies by historic standards, financial markets that have mostly shrugged off the SVB-related turmoil by now, along with growing signs that inflation is softening and the Fed are nearing a pause in their rate hikes.”
3. More earnings on the way: “We’re bullish on Netflix into 1Q23 results as we think management will be optimistic on the lift to the P&L [profit and loss] from paid sharing implementation,” wrote Wells Fargo analyst Steve Cahall.
4. Shiny gains: Gold prices (GC=F) are a stone’s throw away from the summer 2020 record highs of $2,075 an ounce. Gold prices are up 13% year to date as investors seek out safe-haven investments post-banking-industry turmoil.
5. Building declines: Mortgage rates have declined for five straight weeks. The SPDR S&P Homebuilders ETF (XHB) is not really responding though — it’s only up 1.1% in the past month versus a 6% gain for the S&P 500.
6. What volatility? The Cboe Volatility Index dear to investors (better known as the VIX) has dropped back below 18 to its lowest level since the stock market sell-off began in January 2022. Talk about a weird move just weeks removed from a banking crisis.
7. Still recession spotting: Goldman Sachs chief economist Jan Hatzius said in a new client note that there is still a 35% chance of a recession in the next 12 months. On the positive side, there is a 65% chance there won’t be a recession in the next 12 months.
8. The rent is no joke: Property appraiser Miller Samuel said in a new report that the median Manhattan rent reached a record high of $4,175.
9. Rich people get richer: After a big quarter on the back of luxury goods demand on a reopening China economy, LVMH’s stock hit a record high.
That has widened LVMH founder Bernard Arnault’s lead over Tesla CEO Elon Musk for the title of the world’s richest person. Arnault is worth a cool $210 billion, up $48 billion year to date. Musk is worth $180 billion.
10. Dr. Doom speaks out: Nouriel Roubini, better known as “Dr. Doom” for his dire economic predictions, told Yahoo Finance Live the current banking industry turmoil will exacerbate a “credit crunch,” in which loans are harder to find due to more scrutiny and a risk-off environment.
“That credit crunch is gonna tip the U.S. economy into recession later this year,” Roubini warned.