The Lookout | Week of March 28, 2022

The Lookout | Week of March 28, 2022

Daniel Rudnitsky of SMH Capital Advisors and Simon Lack and his team at SL Advisors provide commentary on what markets might expect in the week ahead in this edition of The Lookout.

Major Market Events:

Wednesday, March 30: US GDP QoQ Report, US Crude Oil Inventories

Thursday, March 31:  US Initial Jobless Claims, Great Britain GDP Report, Canada GDP Report

Friday, April 1:  US Nonfarm Payrolls, US Unemployment Report, German and Great Britain PMI Reports

Daniel Rudnitsky, SMH Capital Advisors, and Senior Portfolio Manager of an income strategy

• Investors hope March volatility recedes as anxiety from the Russia-Ukraine war and over higher interest rates persists.
• OPEC+ will hold a virtual meeting during which the group is expected to keep current production plans in place.
• On the economic calendar, the U.S. jobs report for March will be released with economists forecasting a gain of 450K jobs to follow last month’s 678K. The unemployment rate is seen dropping to 3.7%. Average hourly earnings are expected to be 0.4% higher month-over-month and 5.4% higher year-over-year.
• High Yield bonds are on track to post losses for a third straight month, but amid all the news impacting investors, the pullback still keeps HY as the best performer for March in the broad U.S. fixed-income market. The month-to-date losses for the HY bond index stands at 2%.

Simon Lack, SL Advisors, and Portfolio Manager of an energy infrastructure fund

• Five-year inflation expectations have moved up to 3.5%. Interest rates have moved sharply higher, with the market pricing in at least one 0.50% hike over the next few months and a neutral rate around 2.5%, up from 2% a month ago. Inflation permanently above the Fed’s 2% objective is being priced in.
• Natural gas stocks rose sharply last week on the back of President Biden’s pledge to provide Europe with more exports of Liquified Natural Gas (LNG). In our opinion, this moderation of the administration’s opposition to fossil fuels offers further upside for LNG-linked stocks.

Thank you for reading The Lookout. Come back next Monday for more insights on what investors can expect in the markets.