• The US Trade Balance printed a deficit of -$67.4B versus the estimate of -$68.5B for December.
    • Increasing to a record -$948B, with Goods showing -$1,191B, and Services with a surplus of $243B.
  • Initial Jobless Claims showed 196K filing for the week ending on February 4th, compared to the 190K consensus expectation, representing the first increase in filings over the last six weeks.2
    • Continuing claims, which include people receiving benefits for a week or more, increased to 1.69 million for the week ending on January 28th. 2
  • December CPI was revised higher to 0.1% from -0.1% and Core CPI was revised to 0.4% from 0.3%.3
  • University of Michigan Consumer Sentiment Index posted a higher-than-expected 66.4 versus the consensus of 65.4
    • Inflation expectations rose to 4.2% from 3.9% on the previous release. Long term expectations remained at 2.9% for the third straight month.4

How do Initial Jobless Claims, and Consumer Sentiment impact you?

  • This is the first pick up on jobless claims over the last month and a half; despite that, claims remain at historic lows, confirming the strength of the job market and raising hopes for a soft landing.
    • The FED has been tracking the labor market and has expressed the need for a softening in labor as a factor to bring inflation back to target.
  • Each year CPI numbers are recalculated to adjust for seasonality, causing revisions in the data released.
    • December CPI swung from negative to positive, raising concerns that inflation might be harder to fight.3
  • Consumer sentiment’s upward trend lowers concern that a recession is imminent, highlighting consumer resilience.
    • Sentiment is +6% compared to a year ago, but still -14% compared to two years ago.4


  • This week all eyes will be focused on January’s CPI numbers. A confirmation of the downward trend is expected, and any big

misses could cause volatility in markets given the importance of the number for the FED.

  • The YoY number is expected to decline to 6.2% from 6.5%, while the MoM numbers is expected to rise by 0.5% after a revised 0.1% increase in December.
    • The consensus for MoM Core CPI is at 0.4%, replicating the revised number from December.
  • We will also get numbers related to the state of the economy with expectations tilting to positive on consumption and production, casting more light on the state of the economy and the effects of monetary policy.
    • Retail Sales for January are expected to rise 1.9% after a decline of -1.1% in December.
      • Consensus for Retail Sales Ex Auto is at 0.8% after a decline of -1.1% in December.
      • Industrial production is expected to rise 0.5% after a decline of 0.7% in December.
    • Index for Leading Economic Indicators (LEI) is expected to fall 0.3%, an improvement from previous numbers in December and November of -0.8% and -1.0%, respectively.

On Tuesday, we will have earnings reports from Walmart and Home Depot. These could be useful as another data point to assess the state of the economy and consumer spending


Market Index Returns (%) as of 2/10/23WTDQTDYTD1 YR3 YR5 YR
S&P 500 TR USD-1.076.716.71-5.888.5411.27
NASDAQ Composite TR USD-2.3712.0512.05-14.297.5712.27
DJ Industrial Average TR USD-0.112.332.33-0.437.169.30
Russell Mid Cap TR USD-1.688.038.03-3.547.699.50
Russell 2000 TR USD-3.349.059.05-4.125.906.75
MSCI EAFE NR USD-1.577.347.34-5.933.323.58
MSCI EM NR USD-2.406.046.04-15.89-0.330.03
Bloomberg US Agg Bond TR USD-1.431.551.55-8.51-2.810.72
Bloomberg US Corporate High Yield TR USD-1.783.083.08-4.600.753.20
Bloomberg Global Aggregate TR USD-1.631.801.80-12.08-4.07-1.31


  • The Dow Jones was the week’s best performer in a broadly down market environment, declining -0.11% vs. -2.37% for the NASDAQ and -1.07% for the S&P 500.
  • Small Caps were the laggards on the week, trailing Large Caps, returning -3.34%, being last week’s worst performer.
  • International stocks underperformed broad domestic stocks, with the MSCI EAFE and MSCI EM returning -1.57% and -2.40% respectively.
  • Bonds were negative across the board, with the Bloomberg US Agg Bond Index declining -1.43%, while the Bloomberg Global Aggregate Index dropped -1.63%.
    • US High yield credit declined -1.78% on the week.


  • Streaming Is Saving Our Quality Of Life: The Ludwig Institute for Shared Economic Prosperity has created an index to measure the cost of basic recreational activities, such as eating out, sports equipment, sports at school, tickets to a minor league game, a three-day vacation, and money for gifts, decorations, and holiday dinner. The cost of this bundle of necessities has risen from $2,586 in 2001 to $3,577 in 2021, which is lower than the overall rate of inflation. The cost of the bundle has actually been decreasing since 2013, due to the replacement of cable TV subscriptions with streaming services. The cost of TV has fallen from $746 per year in 2012 to $277 in 2021, which has helped the overall cost of the bundle fall from $3,900 in 2012 to its current level. This suggests that the greatest corporate force in terms of reducing household recreation budgets may be the rotation away from the cable bundle and towards streaming.6
  • More Than 50 Million Americans to Bet on the Super Bowl: While waiting for official numbers, this year’s Super Bowl is expected to have record-breaking levels of gambling, with more than 50 million Americans betting $16 billion. The expected record-breaking game comes as 36 states and the District of Columbia have legalized sports betting. It was also the first National Football League Championship to be played in a state with legalized sports betting. Fans in the stadium were able to place mobile-phone bets during the game. Anheuser-Busch InBev has been the only company allowed to advertise alcohol at the Super Bowl for the past 33 years, but since they gave up their exclusivity deal with the NFL, other beer and spirit companies like Molson Coors, Remy Cointreau joined the big Sunday festivities.7

Reprinted with permission from BTN. Copyright © 2021 Michael A. Higley.