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4/1 - Weekly Roundup: Jobs, healthy corporate balance sheets, the curve, and buyback blackouts

April 11, 2022
Benjamin Dunn

I’ll start this week with the important takeaway from today’s jobs report:

And a reminder that Powell was very explicit about the Fed’s goals with respect to the labor market – reduce the number of openings per worker:

Which may happen without the aggressive policy path currently priced in to the market:

And with inventories building beyond expectations, the setup for a downside surprise in inflation expectations is in place ahead of the CPI report on the 12th:

But even should the policy path priced by the markets come to fruition, corporates are well positioned:

As they took the opportunity presented by the monetary response to Covid to shore up their balance sheets:

With the 10-2 curve briefly inverting this week and signaling a recessionary future, assessing the value of that signal is of paramount importance.  I think the problem is the signal quality is completely compromised by the Covid distorted inflation data (source: Fundstrat):

Speaking of signal vs. noise, the ratio in the market is about to take its quarterly leg lower:

It’s hard to overstate the importance of the buyback bid:

So with the majority of Homebuilders entering their blackout window, I’ll resist a full throated call to catch the falling knife:

Benjamin Dunn
COO @ Prometheus Alternative Investments