Higher commodity and wage inflation combined with hawkish interest rate expectations may create a challenging environment for U.S. small-cap stocks. In a prior note (Data Insight: A Turbulent Start to the Year for Global Equities, January 27, 2022), we found that the Russell 2000 has suffered the largest drawdowns to begin the year.  As of February 18th, 29% of constituents have experienced a drawdown of at least 50% or more compared to their 52-week high.  Furthermore, only 31% of constituents are currently trading above the 200-day moving average. Smaller companies will have greater challenges managing higher input costs and typically

Nearly every large company has long posted job openings on their own websites and those of third-party aggregators. We all know you can visit the sites to find out how many openings a company has and what roles they’re looking to fill. But, how would one know if the number of openings has recently increased or decreased? While tracing those changes may not be easy, we see value in doing so. Companies often know more about their business conditions and customer demand long before external buy-side and sell-side analysts. Significant changes in anticipated demand are often met by preemptive responses

American consumer confidence, as measured by the Thomson Reuters/Ipsos Primary Consumer Sentiment Index, is steady in November, 2018. “The stock market has been more volatile than usual in recent months,” reports Chris Jackson, Vice President at survey research firm Ipsos.”This volatility is likely freezing the most measurable indices. Consumers are hesitant to invest or plan for growth in the the job market, but they are displaying general optimism that the economy will be better tomorrow than it is today. They look up to the future but aren’t quite ready to act on those feelings today.” Jharonne Martis, Director of Consumer

We think that the slowdown in the average rate of monthly US jobs gains this year is a symptom of a tighter labor market and does not reflect a fragile economy. We also estimate that net payroll growth in excess of 60,000 per month is sufficient for the labor market to tighten. This is a lot lower than in the past, and probably a lot lower than investors realize. As such, we think that both US inflation and short-term interest rates are likely to rise faster than generally anticipated. Refresh the chart in your browser | Edit chart in Datastream