Ceasefire talks a good start, earnings coming soon.

Avory Team
Apr 10
4 min read

Two weeks ago we said peak uncertainty was likely behind us. Last week the data supported that view. This week it helped to confirm it. The gyrations continue. Oil just posted its second largest non-COVID single-day decline in 30 years on ceasefire talks. Only September 24, 2001 was bigger. That is the market pulling out the risk premium it had been charging since February 28. And the reaction across equities was also pretty well noted. Energy gave back gains while everything else pushed higher. Communication Services, Consumer Discretionary, Tech, and Financials were all up, reversing the prior months move. Key though is that the rotation tells you a lot. Investors are binary and short term. The sectors hit hardest during the war were the first to snap back.

That is why missing the best days is so costly. Trying to time markets is tough, data doesn’t support it.

Anyways, underneath the war headlines, the fundamentals have held. The consumer is still spending. Jobs remain stable enough. Real-time inflation is running at 2.3% and looks pretty anchored. March CPI tomorrow (this is Thursday night) may look hot because of gasoline, but Truflation continues to suggest the underlying disinflation trend is intact but perking.

Either way we remain constructive. The path still looks like resolution, and the data continues to support positioning for what comes next.

This Week’s Data

1. Oil posted its 2nd largest non COVID single day drop in 30 years.

Only Sep 24, 2001 was bigger. The Iran ceasefire talks triggered a -15.3% single day move in oil.

Then you have…

Iraq War begins: -14.1%

Saudi Financial Crisis: -12.8%

Russia Ukraine Spike: -12.0%

But overall, this was the market repricing the war risk premium very quickly and also just shows how binary the market has become. We have spoken about this numerous times.

2. The consumer is still spending. Strip out gas and the picture is healthy.

Consumer spending index for March is out, and the Y/Y picture still looks pretty solid. Overall spending rose +3.1%, with online only spending up +8.4% and accelerating, nonstore retailers up +9.0%, and air transportation up +6.5%. Gasoline stations were up +17.1%, which is really the war showing up in the data.

What is most interesting to me is what is not collapsing. Most categories are still flat to positive, which suggests the consumer is absorbing the gas price shock without broadly pulling back. That continues to support the idea of a healthy consumer balance sheet.

3. Real time inflation remains anchored at 2.3%.

Truflation today: 2.30% Y/Y as of April 9.

Housing rents: -1.7% Y/Y per Apartment List.

March CPI prints tomorrow. It will look hot because of gasoline. That is mechanical and expected. But Truflation has historically led the official CPI by roughly 6-12 months and it is sitting at 2.3%. Strip out energy and the underlying disinflationary trend is intact. Housing is the biggest component of CPI and it is moving in the right direction.

4. Tech layoffs nothing like 2022

I keep hearing about fears of AI and jobs yet 2022 was really the year of the tech layoff story. We will track close and update accordingly.

5. Cash App is winning the U.S. download race.

Had to throw this in. We own Block. Cash App: +27% M/M in downloads.

PayPal: declining Y/Y.

Venmo: flat.

Cash App momentum continues here.

6. Claude product announcements but 97% uptime…

I am being a little tongue in cheek here, but Claude keeps launching new products while API and site uptime sits around 97%, which is not where you want it if you expect important workflows to run through those pipes.

7. The AI Paradox.

97% of companies say AI is a priority.

23% have actually deployed anything at scale.

Looking Ahead

Tomorrow April 10: March CPI: First reading to fully capture the oil shock. Let’s see. Expected to look hot. Watch core ex shelter to see if the underlying trend holds. Truflation says it does.
Q1 Earnings Season: Kicks off next week. Guidance matters more than results probably. Companies that signal resilience through the conflict will be rewarded. FactSet is projecting 10%+ earnings and revenue growth for the broad market.
Iran Conflict: Ceasefire talks are moving. Every week without escalation changes the probability here. We are watching the oil futures curve daily as you may have thought.

Have a good weekend!

About Avory & Co.

Investing where the world is headed.

Avory specializes in high-conviction equity strategies, emphasizing Secular Growth and Transformation Stories driven by exceptional teams. Data guides decisions. We cater to high net worth investors, family offices, and institutional investors. Note: This information doesn't constitute a recommendation to buy or sell any mentioned securities. Avory is based in Miami, Florida with clients all across the globe.

Speak to us: Schedule a Brief Zoom Meeting

Send us an email: Team@avoryco.com

Want to invest? We are on most platforms.

Want More

🎥 Avory YouTube Channel

🎙️ Avory Podcast

Disclaimer: Not a recommendation to purchase or sell any securities mentioned. This is for educational purposes only.