ClearWater Market Commentary as of April 14th, 2023

Here is the ClearWater Market Commentary as of April 14th, 2023:

In this issue:
– Performance of Major Indices
– Market Commentary
– Last Week’s Key Economic  Events and Upcoming Events

Performance of Principle Indexes: 

S&P/TSX Composite Index  
5 Day2.01%
1 Month6.15%
1 Year-5.80%

As of 2023/04/14 – Source:

Index PerformancesLast 5 DaysYTD
CAC 402.41%17.75%
WTI Crude (Oil)2.40%3.00%
Shanghai Composite2.12%9.59%
MSCI EAFE2.10%10.40%
S&P/TSX Composite2.01%6.19%
DAX 1.10%15.09%
FTSE 1000.54%7.09%
Russell 20000.49%1.13%
Dow Jones Industrial0.27%0.92%
S&P 500-0.08%6.76%
Hang Seng Index-0.38%1.42%

As of 2023/04/14- Source:

Last week’s and next week’s key economic events:

US economy (S&P 500 -0.08%):

  • The major benchmarks ended the week higher, as investors weighed slowing growth signals against signs that inflation pressures were receding a bit more than expected. 
  • Technology shares lagged, weighed down in part by a decline in graphics and artificial intelligence chipmaker NVIDIA, which continued a recent retreat from a 52-week high.
  • Trade volumes picked up but remained muted for much of the week, as investors waited for the unofficial start of quarterly earnings season on Friday, kicked off by reports from banking giants JPMorgan Chase, Wells Fargo, and Citigroup. All three topped consensus estimates, seemingly helped in part by customers moving deposits from smaller, regional banks, which have come under scrutiny following the collapse last month of Silicon Valley Bank and New York-based Signature Bank. 
  • At the end of the week, analysts polled by FactSet were expecting overall earnings for the S&P 500 to have contracted 6.5% on a year-over-year basis in the first quarter. Despite the banking turmoil, earnings in the financials sector were expected to increase moderately.
  • The most anticipated event of the week may have been the Labor Department’s Wednesday morning release of the consumer price index (CPI) for March. Stocks jumped on the news that the CPI rose only 0.1%, a tick below expectations, bringing the year-over-year rate to 5.0%, the slowest pace since May 2021.
  • Thursday brought further encouraging inflation news on the producer side, suggesting that better prices might be in the pipeline for consumers. The core (excluding food and energy) producer price index declined 0.1% in March, marking the first decrease in the prices businesses pay for inputs since the height of the pandemic shutdowns in April 2020.
  • The week’s data suggest encouraging progress in curbing inflation, but the reports are not yet consistent with the Fed being able to cut rates substantially by the end of the year, as many investors seem to expect. Shortly before the end of trading Friday, the CME Fedwatch Tool indicated that futures markets were pricing in a roughly 46% chance on the federal funds rate ending the year at least 50 basis points (half a percentage point) below its current target range of 4.75% to 5.00%, and a roughly 78% chance that the target would be at least 25 basis points lower. 
  • While the recent banking turmoil has tightened credit conditions and may cause the Fed to pause in its rate-hiking cycle, many believe policymakers would only consider cutting rates after seeing a dramatic deterioration in the labor market and signs that a recession is imminent.
  • The week’s other data arguably brought little evidence of either. Weekly jobless claims rose to 239,000, a bit more than consensus estimates, but remained below their levels through most of March. 
  • While March retail sales fell more than expected, this nominal decline partly reflected cuts in some prices—such as a 4.6% decline in the price of gasoline. According to the study’s chief researcher, the University of Michigan’s preliminary gauge of consumer sentiment rose surprisingly. According to the study’s chief researcher, rising optimism among lower-income Americans fueled the increase, but this was partly offset by worsening attitudes among those with higher incomes.

Canadian markets (S&P/TSX 2.01%):

  • Canada’s main stock index eked out a small gain thanks to strength in battery metals, while U.S. markets were down even as the country’s biggest banks beat earnings expectations.
  • The Bank of Canada held its benchmark interest rate at 4.5% on Wednesday, pausing its year-long campaign to increase borrowing costs, while leaving the door open for further rate hikes if inflation doesn’t slow as quickly as expected. The BoC expects inflation to fall to 3.0% by the middle of the year, which is in line with our model of 3.6% by summer.
  • As inflation in Canada subsides, the next move for the BoC could be a rate cut; however, the statement from Governor Tiff Macklem dampened hopes for a cut until the latter half of the year.
  • The central bank’s primary concern appears to be ensuring that inflation falls to its target, rather than the potential for a recession in Canada. The central bank’s statement mentioned that “getting inflation the rest of the way back to 2% could prove to be more difficult,” which was especially noteworthy, indicating that rates will stay where they are for the time being.
  • The statement acknowledged potential weakness in the U.S. and Canadian economies but maintained a firm stance against inflation. It’s a game of chicken, pitting the economy against inflation to see which will give in first. The BoC is betting on a strong job market to give the winning edge to the economy.
  • Retail sales in the U.S. slowed in March, another sign of the economy softening under the pressure of high interest rates, while Canadian manufacturing sales were also slightly weaker.
  • Next week in Canada will see retail sales data and fresh inflation numbers, while in the U.S. the focus will be on more earnings.
  • The Canadian dollar traded for 74.84 cents US compared with 74.86 cents US on Thursday.
  • The May crude contract was up 36 cents at US$82.52 per barrel and the May natural gas contract was up 11 cents at US$2.11 per mmBTU.
  • The June gold contract was down US$39.50 at US$2,015.80 an ounce and the May copper contract was down two cents at US$4.11 a pound.

Performance 2023: S&P 500 Sectors   

Forward P/E Ratios: S&P 400/500/600 Sectors

European and Asian economies:

  • Stocks in Europe rose as recession fears waned.
  • On a seasonally adjusted basis, eurozone industrial production in February rose, which was stronger than expected. Higher output of capital goods and nondurable consumer goods were key drivers. However, in March, retail sales volumes, matching forecasts, official data showed. 
  • The UK economy appeared to be on course to defy a Bank of England (BoE) forecast for a recession in the first quarter, official data indicated. Gross domestic product (GDP) remained flat month over month in February. This result was slightly below expectations, as strikes weighed on public services. However, the revision to January’s GDP figure indicated that the economy expanded 0.4% that month. Even so, the International Monetary Fund (IMF) still predicted that the UK’s economy would shrink 0.3% in 2023, a projection that was less than its previous forecast.
  • France’s Constitutional Council, the equivalent of the U.S. Supreme Court, ruled that a law to increase the pension age was valid, raising the prospect of more public protests.
  • Japanese equities gained over the week. Sentiment was boosted by prominent investor Warren Buffett saying that his company, Berkshire Hathaway, would increase its investments in Japan. Dovish comments from new Bank of Japan (BoJ) Governor Kazuo Ueda and subsequent yen weakness also supported risk assets. 
  • Kazuo Ueda was sworn in as the new BoJ governor on April 9. At his first press conference, Ueda issued a series of dovish remarks that supported market sentiment. He said that, because a policy of negative interest rates has been the basis of current strong monetary easing, it is appropriate to continue it on the assessment that the central bank’s 2% inflation target has not been achieved. Once the BoJ sees the target as truly achievable, policy normalization can be pursued. He added that, given the economic, price, and financial environment, it is also appropriate to continue with the current yield curve control framework.
  • However, sounding more hawkish, Ueda asserted that the side effects need to be considered and the impact of ultra-easy policy from a long-term perspective may need to be reviewed. Whether the BoJ conducts a comprehensive review will be discussed and decided at future policy board meetings. Finally, he cautioned against behind-the-curve policy decisions.
  • The IMF revised downward its projection for Japan’s 2023 economic growth to 1.3% from 1.8% in January. It attributed this to weak economic performance over the final quarter of last year, with sluggish business investment having a knock-on effect. Currency volatility also played a role.
  • Chinese stocks were mixed after a volatile week as softer-than-expected inflation dampened investor sentiment. 
  • Inflation eased for the second straight month in March. Core inflation, which excludes volatile food and energy prices, rose to 0.7% in March from 0.6% in February. The producer price index slid 2.5%, the lowest since June 2020 and its sixth straight monthly decline, according to Reuters.
  • The latest data trailed the government’s consumer price index target of around 3% growth this year and raised expectations that the People’s Bank of China (PBOC) would step up stimulus measures to support the economy. 
  • On the trade front, China’s exports unexpectedly rose 14.8% in March from a year ago, surprising analysts who had forecast a decline and marking the first increase since September. Imports fell a less-than-expected 1.4%.

What to watch this week:

  • Canadian inflation and retail sales data
  • US housing data
  • Chinese GDP data
  • 60 S&P 500 and 2 S&P/TSX companies report earnings

Sources:,, Barron’, and

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