Better Than Expected Earnings Power Indices Higher

April 28th, 2023

Below are this week’s highlights and key indicators:

  • Stronger than expected corporate earnings from big tech giants Microsoft and Meta Platforms powered the major indices higher this week. The Dow Jones Industrial Average rose 2.48%, while the S&P 500 climbed 1.46%. Their results helped improve the still evolving, aggregate earning picture with the S&P 500’s overall earnings now expected to fall -1.90%, from the -5.10% forecasted at the beginning of the month. Of the 267 companies that have reported earnings to date, 78% have reported above analyst expectations. That compares favorably to the long-term average of 66%.


  • Markets rallied late in the week despite the slow top line economic growth reported in the advanced Q1 GDP report. U.S. GDP rose 1.10% in the first quarter, worse than economists’ 2.00% forecast and down from Q4’s 2.60%. Increases in consumer spending, exports, and government spending were weighed down by declines in private inventory investment and residential fixed investment. Consumption still proved strong during the quarter, rising 3.70%. However, spending is believed to have faded towards the end of Q1 as consumers pulled back on rising recessionary concerns and higher rates. Higher mortgage rates made homes less affordable and businesses worked to spend down inventories on expectations the consumer will weaken in time. Investors viewed the report favorably, however, hoping it will prompt the Fed to pivot to lower interest rates to boost economic growth in 2H 2023.


  • Consumer sentiment brightened in April with the index of consumer sentiment rising to 63.5 from 62.0 in March. Consumers’ mood grew more positive during the month, driven by lower-income consumers which offset declines among those with higher incomes. Buying conditions for durable goods also improved. However, elevated prices continue to weigh on consumers despite headline inflation decelerating over the last several months. The Fed’s preferred inflation gauge, the personal consumption expenditures (PCE) index rose 0.10% in March while the core PCE, which excludes food and energy rose 0.30%. Year-over-year, the PCE and core PCE were up 4.20% and 4.60%, respectively. The inflation figures suggest the Fed still has more work to do to stomp out broad-based core inflationary pressures.


Parting Thoughts

Major equity markets closed the month in the black with the Dow Jones Industrial Average posting its second consecutive month of gains and its best return since January. Volatility declined considerably in April with the VIX (volatility index) falling to its lowest level for the year. The decline in volatility has been anchored by a growing consensus by investors that next week’s FOMC rate hike will be the last before the Fed pauses in June and begins cutting by year end. The market is blindly biased towards an imminent pivot, ignoring two very plausible outcomes that could throw a wrench into expectations. The first is an actual recession. Q1’s GDP is estimated to have slowed to 1.10%, which was a rapid deceleration from Q4 2022’s 2.6% growth, and, given the lag effect in monetary policy, raises questions whether the economy will slide into negative territory soon. In January, 61% of economists forecasted a recession by year’s end, according to the Wall Street Journal.   A more recent Bankrate survey in April puts that number at 64%.

While the market has, at times, traded down on recession fears, analysts still expect a strong performance in 2023 with S&P’s earnings expected to grow by double digits for the year. The strength in the labor market (wage growth +4.8% YOY), the recent PMI numbers, and some of the underlying trends in the Q1 advanced GDP release put us in the camp in believing that the greater risk is not that of a recession but rather the Fed not pivoting as the market expects. Yes, companies like Amazon, UPS, 3M and others are talking about a recent inflection in consumer behavior, which is considered to be more real time than the GDP data, but any consumer weakness seems isolated and sporadic at present. While GDP slowed to 1.1% annualized (real), overall consumption still grew 3.70%. Durable goods consumption grew at a 16% annualized rate. Services consumption was higher than in Q4 and greater than the comparable quarter a year ago. Importantly, the overall headline GDP growth figure was held down by a -12.5% decline in private investment (equipment and real estate principally), which is not likely to persist since it is likely a reflection of companies and investors being cautious in the near term in anticipation of a recession that has yet to materialize. It seems increasingly likely to us that the market and the Fed are simply not on the same timeline, and markets may soon have to face that as a reality. That timeline may be extended, however, should First Republic fail over the weekend. Silicon Valley Bank failed just prior to the previous FOMC meeting, and it is serendipitous that the weekend prior to the very next FOMC meeting that First Republic will likely need a rescue of its own. SVB’s collapse put the Fed in a position of having to soothe markets and make supportive statements, which has fed into the market’s conviction of a nearer term pivot. If First Republic should fail, the Fed will find itself in a similar position of having to prioritize the stability of the larger banking system over its desire to act more aggressively on inflation – which is a position investors may be gleeful in seeing.

The Week Ahead

Next week,  we’ll report on the Fed Meeting, Nonfarm Payrolls, and ISM Manufacturing and Services.

Your Digital Life After Death

In today’s technology and internet-driven world, most of us have a wide variety of personal files and data stored on our computer, phone, tablet, and in the cloud on sites such as Dropbox, Google Drive, iCloud, or Microsoft OneDrive. What happens to all of this content if something were to happen to you? Would your family be able to access priceless photos and memories? Would your business have access to important software or other online platforms to continue to operate seamlessly? Getting a digital estate plan in order and making your intangible digital assets part of it will help ensure that individuals you designate can access important accounts and content when you are gone. You can specify what you want to have happen with all of your photos, digital music, social media accounts, email accounts, online records, and hard drives where digital content is stored, and can ensure – should you desire – that a family member or loved one will know how to access these digital assets if something were to happen to you.

Below are some considerations for your digital life after death:

  1. Passwords. Share passwords to unlock devices that you use to access digital content, such as your mobile phone and computer. If you use a password manager, share the master password. Some password managers let you designate a contact who can be granted access should you die or become incapacitated.
  2. Online Files. Computers may store tax returns or other sensitive information, so it’s important to designate someone who can log in and download or delete files you choose, and then wipe the computer clean if needed. 
  3. Personal and Business Contacts. Decide if you’d like a family member or loved one to be able to gather the names and numbers of your friends and business associates from your phone’s contacts.
  4. Email Accounts. Email accounts may need to be closed, deleted, or monitored.
  5. Utilities. Utilities and services that are set up to autopay, such as internet, streaming services, electricity, and mortgage payments would need to be transferred to someone else, closed, or deleted. It will be easier for family members to manage the process if they have your log in credentials online and make any changes necessary.
  6. Apple. Apple allows users to designate a legacy contact by generating an access key that the legacy contact would provide, along with a copy of your death certificate. Apple shares what information the legacy contact can access here.
  7. LinkedIn and Twitter. These platforms don’t offer a way to name legacy contacts, but survivors can request the removal of a deceased person’s account on both Twitter and LinkedIn.
  8. Facebook. Legacy contacts can be added to Facebook accounts by going into the memorialization settings under Settings & Privacy. The social network allows legacy contacts to look after your main profile if it’s memorialized where they can download a copy of what you’ve shared on Facebook, update your profile and cover photos, as well as request the removal of your account. They won’t be able to log into your account, read your messages, or add or remove friends.
  9. Google. You can decide what to do with your Google account and data by going to, tap Data & Personalization, then scroll down and select “Make a plan for your account.” You will be directed to Google’s inactive account manager tool where you can name contacts and choose which data, emails, photos, documents, etc. you want to share.
  10. Hard Drives. Make sure loved ones know the location of hard drives or online storage accounts and can access and either download the contents or transfer the account to themselves if needed. You may wish to designate legacy contacts for your cloud-based accounts and notify those people.
  11. Entertainment. If you purchased digital songs, books, movies, software, games, or apps, your end user agreement may specify if and how you may transfer ownership. Families may choose to keep certain accounts open in perpetuity to maintain access, presuming they understand the terms of service.
  12. Payment Transactions. Make a plan to provide access to accounts that manage payment transactions such as PayPal or Venmo, bank accounts, and any accounts with credit balances.
  13. Subscriptions. Subscription services that charge ongoing fees may need to be canceled or transferred to someone else.
  14. Loyalty Programs. Credit card points and any other benefits or rewards that may have accrued to you could be transferred to loved ones. Learn the rules surrounding transfer of these assets and consider them in your digital estate plan.
  15. Other Online Assets. Domain names you may own, copyrighted digital materials, registered trademarks, and patents count as your digital property and will likely have some monetary value and should be incorpored into your digital estate plan.
  16. Business Accounts. Your company’s website, social media pages, accounting software, human resources records, and other digital assets should be contemplated as you prepare your digital estate plan to ensure a smooth transition if something were to happen to you.









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