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Thursday, April 25th, 2024

Pre-market futures are plummeting at this hour. We began the early trading session down anyway, based on earnings disappointments from Meta META and IBM IBM after yesterday’s close. This morning, Dow component Caterpillar CAT is down more than -6% on its Q1 revenue miss. Beyond Q1 earnings results, we also have lots of economic data, much of which came up short of expectations.

The first print on Q1 Gross Domestic Production (GDP) came in well below estimates. Headline +1.6% missed the 2.2% anticipated, and less than half of Q4 2023’s final +3.4%. The last time we saw GDP this low was back in Q2 of 2022, when we saw a negative -0.6%. Consumption came in half a percentage-point below expectations: +2.5% versus +3.0%. The Price Index (the full PCE report is out tomorrow morning), meanwhile, was higher: +3.1% versus +3.0% — the highest since Q3 ’23’s +3.3% and nearly double the +1.6% the previous quarter. Can you say “stagflation”?

Initial Jobless Claims, meanwhile, stayed uncommonly well-behaved: 207K, below the unrevised 212K from the prior week and the 215K expected. A year ago, new jobless claims were grappling in the 240K range, on the way to a multi-year high 265K last summer. Since the start of the year, we’ve been at or below 200K three times. This is consistent with an historically robust labor environment — no doubt influenced by a large influx of immigrants to the U.S.

Continuing Claims also stayed low. Headline 1.78 million is the lowest weekly print since mid-January, with the previous week’s 1.796 million revised down from 1.812 million, which was itself historically low. Analysts had been keeping 2 million longer-term jobless claims on their radar, but it’s gone for naught: the last time we were even north of 1.9 million was back in November of last year. A narrow range around 1.8 million has been our norm for the past three months.

Advanced Trade Balance in Goods for March came in slightly below expectations, to -$91.8 billion. Advanced Retail Inventories grew only +0.3%, 20 basis points (bps) lower than expectations. Advanced Wholesale Inventories swung to a negative -0.4%, the lowest mark we’ve seen since June of last year. Because these are advanced numbers, they are necessarily speculative. What they speculate, however, is a somewhat weakening economy.

Isn’t this supposed to be good news? If we’re looking for interest rates to come down from their draconian 5.25-5.50%, where they’ve been for the past nine months, isn’t the lessening of data points across the broader economic spectrum a necessary component to bringing these to a more manageable level? The pre-market doesn’t think so: the Dow is -421 points at this hour, the S&P 500 is -58 and the Nasdaq is -253 points. Aside from bargain-hunting traders, this big comedown is something the Fed is probably less than displeased to see.

Q1 earnings results are plentiful this morning. To name just a few, Caterpillar beat on earnings but missed on the top line, as mentioned above. Airlines American AAL and Southwest LUV both posted wider-than-expected losses on slightly inferior revenue totals, though only LUV is down big. For some good news, AstraZeneca AZN easily surpassed expectations on both top and bottom lines and is up +5% in today’s pre-market. After today’s close, we’ll hear from Microsoft MSFT, Intel INTC, Alphabet GOOGL and Snap SNAP, among others.
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