Earnings vs. Inflation! Springtime Housing and Autos
Volatility was front and center last week with the Bulls winning out, as profit reports impacted the markets greater than inflation.
Meta’s earnings, immediately dropped the markets, followed by a quick reversal higher, lifted by well received reports from Alphabet and Microsoft. The Fed’s favorite inflation gauge, the Personal Consumption Expenditures Price Index came in hotter than expected, however could not derail the rally.
For the week the Dow rose .76%, the S&P 500 2.82%, the Nasdaq 4.18% and the Russell 2000 2.88%.
Foreign stocks joined in, moving higher by 2.45% and Emerging Markets 3.58%.
Bond yields moved higher, as the 10-year US Treasury broke the 4.7% level, however finished the week with a yield of 4.663%. On January 1, 2024, the yield was approximately 3.866%, for perspective.
The question for the bond market, will yields continue to rise and if so, how much higher? Many variables to debate.
The Week Ahead
On Wednesday, the Fed meets with no expected change in rates, however what the Fed is thinking about the recent elevated inflation readings, will be worth paying attention.
On Friday, the April jobs report will be released. Expectations are for the number to have cooled slightly to 250K jobs. Prior to Friday, the earnings reports start to roll in.
We’ll hear profit reports from Amazon, Apple, AMD, Eli Lilly, GE Healthcare, Allstate, McDonalds, Public Storage, Norwegian Cruise Lines, Stanley Black & Decker and many more.
After this week’s job report the next significant inflation reports, CPI and PPI occur on May 14th and 15th.
Spring is in the air!
The weather finally appears to be turning warmer here in New Jersey. Springtime typically means a pick-up for home and automobile sales.
Last week, the average 30-year fixed rate mortgage climbed to the 7.3% range. Supply remains tight which could mean prices continue higher for the time being. This may keep many younger would-be buyers on the sideline.
Rates on automobile loans have also risen respectively, however many manufacturers are subsidizing the loans to keep the rates below market. Most auto dealers have plenty of inventory!!
What if you want to purchase or lease an EV?
If you purchase and meet the qualifications you can automatically receive the tax credit, reducing the price of the vehicle by the amount of the credit.
The credit is $7,500 for new EV’s that meet the critical minerals and battery component requirements, $3750 if only one is met. The final assembly of the vehicle must be in the U.S. and the manufacturer’s suggested retail price cannot exceed $55K for Sedans, $80K for vans, SUVs and pickup trucks.
Your income also comes into play. If you file a joint return, your modified adjusted gross income cannot exceed $300K, $225K for filing head of household, and $150K filing single.
If you want to lease, keep in mind the credit does not automatically go to you. The manufacturer will receive the credit as they technically own the vehicle.
You can certainly request the dealer reduce the price of the leased EV by all or part of the dealer’s credit. According to my research, many dealers will cooperate.
