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Weekly Market Recap | 9/11/23

What happened last week

  • Strong data drove Treasury yields higher and stocks lower in a holiday-shortened trading week.
  • As China signals iPhone bans, $200B of Apple’s market capitalization was erased.
  • Brent crude oil closed the week above $90/barrel for the first time since November last year.

What we’re watching this week

  • August CPI is the most important data
    release this week; wage inflation read-throughs from the UAW negotiations are a related inflation data point.
  • Apple product launch on Tuesday will be in focus.
  • Retail sales data in the US and China will provide an update on consumer spending in the two largest economies.

Horizon’s Investment Management Views

  • Rising Treasury yields due to stronger economic data drove a sell-off in equities; jobless claims fell to their lowest levels since February, and a strong ISM Services print signaled a possible re- acceleration in economic activity. As Russian and Saudi oil production cuts propelled Brent crude over $90/barrel, energy equities were the bright spot. Meanwhile, Apple, the largest holding in the S&P 500 and the NASDAQ 100 sold off almost 6% on news of China banning iPhone use in some government-related sectors. With this in mind, Apple’s annual product launch on Tuesday should draw heightened interest.
  • Suffice it to say that September has not started well for equity bulls. Although recent price action has left much to be desired, a stronger-than-expected economy and rising energy costs are not good reasons to cut equity exposure; instead, these developments are likely to drive near-term volatility and could cause a change to what exposures have been winning and losing recently in global equities.
  • On the inflation thread, the August CPI release will be the week’s major macro highlight. Rising energy prices are expected to increase headline inflation, while core inflation is expected to moderate. CPI won’t sway the Fed’s September decision (no rate change is expected); it could alter policy from November onward. Further, we are watching the labor negotiations in the auto sector for broader potential implications for wage inflation. An ECB policy meeting, US retail sales, and monthly data from China will round out a busy week.

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