The Week Ahead

Macro Movers

Although the Fed’s SEPs were incrementally hawkish, the committee maintained their forecast for three 25 bps cuts this year. In response, the market soared to new record highs, which suggests stocks can continue to perform so long as the next Fed move is a cut and the economy continues to defy recession. 

From a data perspective, this is a tough needle to threat. Data needs to be soft enough to permit an eventual Fed cut and strong enough to keep recession talk in Pandora’s box. Consequently, the smaller the delta between consensus forecast and the results, the better it is for the stocks. 

Final Reading Q4’23 GDP : Analysts have projected no change from the Second Estimate that printed 3.2%. 

PCE: The personal consumption expenditures is the Fed’s preferred inflation indicator. Emphasis will be placed on core metrics. MoM, core PCE is expected to increase 0.3%, slightly less than 0.4%. The forecast for core YoY is 2.8%, identical to the prior month. 

Coincidently, this data releases while the market is closed for Good Friday. Consequently, I anticipate added volatility on Thursday as investors position for a long weekend ahead of a significant macroeconomic report.

Macroeconomic and Monetary Policy Conference: Three hours after PCE is released, this conference starts at 11:30AM. PCE is almost guaranteed to come up. That being said, Powell’s messaging has been remarkably consistent. It is hard to anticipate any material deviation from the stance taken at last week’s FOMC.

Micro Movers

Cintas (CTAS) & Paychex (PAYX): Results and commentary from Cintas and Paychex will contain relevant insights into the health of small-to-medium sized businesses. Cintas provides uniforms, mats, mops, cleaning, as well as safety products and classes in fire-safety and first-aid. Paychex provides human resource services related to employee payrolls and benefits. Therefore, the better their results, the better we can feel about how U.S. businesses are doing now and feel about the future.