The only thing we know is that baseball is back…
Economically speaking, 2023 has been a year of changing narratives: Soft Landing in January, No Landing in February and Hard Landing in March. As we sit here on the 10th day of April, the further inversion of the yield curve (-156 bps now vs. -113 bps in mid-March), suggests that a recession will occur at some point even though the U.S. economy remains healthy right now.
Since we cannot control nor influence either fiscal or monetary policy, our focus is on weather, U.S. planting of corn, soybeans and spring wheat, Brazilian soybean production, U.S. exports to China, and Black Seas grain production. (The full weekly briefing contains several charts of interest on these topics, please direct message us with your email if you’d like to be on the distribution list.)
In an attempt to make sense of current and future events, we are reading The New Map by Daniel Yergin, which focuses on “Energy, Climate, and the Clash of Nations.”
The Watch List
U.S. Economic Health
- Last week’s March jobs report (+236K) and low unemployment reading (3.5%) suggests the economy remains in good health.
Inflation Outlook
- Two forthcoming reports this week, CPI and PPI will provide updates on U.S. inflationary trends.
Corporate Layoffs
- Job cuts for the technology sector (only) over the past six months have been large, totaling 220,000 during 1Q 2023, up from 116,000 in 4Q 2022
Commodity Prices
- During 1Q 2023, food commodities, Orange Juice (+31%), Cocoa (+13%) and Sugar (+11%) topped the leader board, while Natural Gas (-50%), Lean Hogs (-14%) and Wheat (-13%) represented the laggards. What will happen in 2Q?
The Debt Ceiling
- Extending the debt ceiling will become increasingly politicized as we approach the early summer deadline.
The Week Ahead
Monday, April 10
- USDA Crop Progress report; corn typically is 25% to 30% planted by end of April (we are keenly watching weather)
- Tuesday, April 11
- USDA’s WASDE and monthly Crop Production reports
Wednesday, April 12
- Weekly ethanol production figures from EIA
- Bank of Canada monetary policy decision
- BLS reports March Consumer Price Index (CPI). Key here will be whether core services will exceed the +6.1% reported in February.
Thursday, April 13
- USDA Weekly Export Sales
- BLS reports March Producer Price Index (PPI)
Friday, April 14
- Bank earnings season begins with Citigroup, JPMorgan, PNC, Wells Fargo.
- University of Michigan (Go Blue!) monthly consumer sentiment report; also Census Bureau reports March retail sales data
Numbers of Interest
-5.0% Expected year/year decline in S&P earnings for 1Q 2023, vs. -3.2% in 4Q 2023 (source: Barron’s)
10.5% The share of gross domestic product Social Security and Medicare will consume by 2033 (source: WSJ)
4.2% Average hourly earnings for all workers grew by 4.2% y/y in March, down from a peak wage gain of 5.9% y/y in March of 2022, likely representing the 24th consecutive month in which wages have grown more slowly y/y than headline CPI. (David Kelly, JPM).
1.67 to 1 Ratio of U.S. job openings to unemployed persons
$304 Billion Amount of liquidity issued by the Home Loan Bank System for the week of March 13th (Source: Barron’s)
-30% Decline in Lithium prices thus far in 2023, after a 12x run-up in prices over the past two years (Source: Barron’s)
Kenneth Scott Zuckerberg is Lead Industry Analyst, Grains, Farm Supply & Biofuels, CoBank.
