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Economic Data Deluge

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While we look forward to the coming deluge of Q1 earnings numbers for the next several days and weeks, this Thursday morning also brings with it some key data points adding grist to the mill of market expectation. Initial Jobless Claims, Imports and Exports from March and minutes from the latest Fed meeting all have something to contribute. We also see the first of the major airlines reporting earnings, so let’s start there—

Delta Air Lines (DAL - Free Report)  outperformed expectations on both top and bottom lines ahead of today’s opening bell, posting 74 cents per share on $9,968 million in quarterly revenues. This amounts to a one-penny beat on the bottom line (though down nearly 4% year over year), and +$80 million on the top, well up from the year ago’s $9,148 million reported. For more on DAL’s earnings, click here.

Initial Jobless Claims remained in the stout, healthy 225-250K range at 233K for last week, down 9000 claims from the unrevised previous week. Continuing claims stayed relatively in-line at 1.871 million, keeping the long-term narrative of a steadily tightening labor market intact. We are up from the nearly half-century lows in jobless claims from a few weeks ago, but this steadiness can only mean good things for an overall economic outlook.

The Import Price Index for March wound up unchanged from the February headline at +0.3%, with the previous month revised down from the +0.4% read initially. However, strip out petrol prices and this figure drops to +0.1%; thus we can see clearly energy prices taking up the bulk of import price increases last month.

Year over year, we are at +3.6%, which is actually a bit below expectations. What’s more, this figure will see intensified scrutiny in the months looking ahead based on possible ramifications from trade friction with China. Without making any bold predictions here, we may expect increased volatility for monthly import pricing from this point.

Exports month over month hit +0.3%, and +3.4% year over year. The monthly read is 10 basis points lower than last month while the yearly account is a bit higher, but overall it’s pretty academic what we’re seeing here: a roughly in-line trade balance between import and export pricing through the first quarter of 2018. Again, we may see these straightforward metrics throwing us some curveballs in the monthly reads to come.

Finally, the Fed minutes from last month's meeting said it was ignoring the slowdown in economic activity for Q1, citing routine seasonality. (Recall a year ago, when Q1 2017 was easily the weakest of last year’s four quarters.) Expectations for Q1 GDP are currently averaging around 2.0%, but the Fed is looking for a big rebound in Q2. This has to do not only with seasonal bias, but the effects of major corporate tax cuts, which are expected to show up in economic growth looking forward into 2018.

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