Stock investors are treading lightly ahead of several key events this week, including remarks from Federal Reserve Chair Jerome Powell today, critical inflation data due on Thursday, and the "unofficial" start of Q4 2022 earnings season on Friday.

Some Wall Street bulls are nervous that Powell today could surprise with another hawkish outlook for the Fed, although most expect him to steer clear of any meaningful policy talk.

It's worth noting that the monthly survey from the New York Federal Reserve released yesterday shows that consumer expectations for inflation fell to the lowest level since July of 2021 while spending expectations fell a full percentage point to the lowest level since January 2022.

Bulls believe the declines are yet more justification for the Fed to ease up on its current tightening campaign. Other recent data continues to paint a mixed picture of the US economy and fuel wide divisions on Wall Street about future Fed policy as well as the prospects for stock gains in 2023.

On the positive side, inflation gauges continue to decline, consumer spending and job growth is holding up, and home prices have sustained sizable gains despite the softening market. The downside is that inflation is still more than double the Fed's +2% target rate, consumers are racking up considerable credit card debt, the US manufacturing and services sectors have sunk into contraction territory, and businesses are still struggling to attract workers as wage gains eat into margins.

Overall, the strong job market and consumer spending are viewed as a welcome sign that the Fed can still guide the economy toward a "soft landing," meaning defeat inflation without sending the economy into a recession. Still, many Wall Street insiders remain concerned that the Fed is not paying enough attention to the contractions already happening in the economy and will go too far with interest rate hikes.

Some economists are also warning that the Fed's focus on the labor market may be misguided as job losses tend to become more of a problem once recession hits rather than providing a warning signal beforehand.

Bottom line, many investors are worried that the economy is right on the edge of weakening to a point that a "soft landing" will be impossible.

The Consumer Price Index on Thursday will provide an update on the inflation situation with consensus expecting another monthly decline. The only data due today is the NFIB Small Business Optimism Index.

On the earnings front, Q4 results "unofficially" begin on Friday with big Wall Street banks, although some results have already started to trickle in. Alberstons is the highlight today. According to FactSet, of the 100 S&P 500 companies that have issued quarterly guidance for Q4, 65 have been negative‚ which is above the five-year average of 57.

Venture Capital Has Taken Big Steps Back: North American venture capital funding dropped -63% year-over-year and down -10% quarter-over-quarter to $36.1 billion last quarter. Investors put $14.4 billion in early-stage rounds during Q4, a decline of -59% year-over-year. Even funding at the seed levels has come down significantly. Seed, pre-seed and angel investment came in at $3 billion in Q4, down -37% year-over-year. VCs also continue to significantly pare back their investments in later-stage startups as the IPO window remains mostly closed due to heightened US equity market volatility and contracting tech valuations. Source Crunchbase

Bob Iger Tells Disney Employees... Return to Office Four Days a Week: Less than two months after returning to the helm, Disney CEO Bob Iger told "hybrid employees" they must return to corporate offices four days a week starting March 1. Iger’s four-day-per-week stipulation is relatively strict compared with other large companies, many of which have opted for two or three mandated in-office days for hybrid employees. Iger plans to reorganize Disney’s Media & Entertainment Distribution division, which oversees the company’s content and distribution. He is also maintaining a hiring freeze implemented by the former CEO while he changes the company’s organizational structure to give budget powers back to those who select creative projects. Over the past year, Disney shares have fallen about -40%. Let's hope they can get back on track. I remain a longer-term shareholder! Source CNBC

Texas Continues Population Surge: Texas saw the most population growth among the U.S. states between 2021 and 2022, per the U.S. Census Bureau, and with last year's population surge, Texas became the only state other than California with a resident population above +30 million. The Lone Star State added +470,708 people between July 2021 and July 2022, reaching a total population of 30,029,572, according to data recently released. Population growth in Texas grew in three ways, net domestic migration of +230,961, net international migration of +118,614, and natural increase of +118,159. It's worth mentioning that Florida saw the largest percentage increase in total population at +1.9%, while Texas grew by +1.6% Source Axios

1 10 2023
US Agency Considers Banning or Restricting Gas Stoves: The federal government may consider a ban on gas stoves thanks to mounting concerns about the health impacts of the appliances. Richard Trumka, Jr., a commissioner at the US Consumer Product Safety Commission, said the agency would consider a range of options, including restricting manufacturing or importing gas stoves and/or putting emissions standards on the products, to better protect US consumers. The CPSC has been considering action on gas stoves for months. Trumka recommended in October that the CPSC seek public comment on the hazards associated with gas stoves. The pollutants have been linked to asthma and worsening respiratory conditions. Thirty-five percent of households in the United States use a gas stove, and the number approaches 70% in some states like California and New Jersey. Other studies have found these stoves emit significant levels of nitrogen dioxide, carbon monoxide, and fine particulate matter – which without proper ventilation can raise the levels of indoor concentration levels to unsafe levels as deemed by the EPA. The American Gas Association pushed back against a natural gas ban in a blog post in December, saying it makes housing more expensive as “electric homes require expensive retrofits Source CNN

Consumer Reports Says EVs Less Reliable Than Gas-Powered Counterparts: Electric vehicles have fewer moving parts than gas-powered cars. That mechanical simplicity, advocates say, should lead to fewer part failures — and more reliable vehicles — over time. The logic behind the argument is sound. But the numbers aren’t yet proving it true, according to Consumer Reports. The magazine doesn’t test every car on the market. Instead, it asks its readers to report problems they’ve had in the last 12 months, then compiles the results for vehicles built since 2000. As a result, its data set is limited to the cars CR subscribers own. Its 2022 data, CR says, “reveal that EVs as a category have more frequent problems than other vehicles.” The magazine attributes the trend to technological maturity. Gas cars, it says, “benefit from carrying over major components” from many years of designs. On the other hand, EVs are primarily built on all-new platforms. "All these new features can often mean new problems.” Kia EV6 owners reported fewer problems than owners of any other EV, CR says. The Tesla Model 3 came in second, though the magazine is careful to note that it did not rate the reliability of Tesla’s driver assistance systems. The Nissan Leaf took the bronze spot on the podium. Source Marketwatch

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