Rover's Weekly Market Brief - 05/12/2023

Dividend Investing – Part 3

This week we have our third and final part of our three-part blog series on dividend investing. Part 3 covers tracking dividend income in Stock Rover.

Economy

The U.S. Energy Information Administration (EIA) in its May 2023 Short-Term Energy Outlook (STEO) expects that U.S. crude oil production will rise by 640,000 barrels per day (bpd) to 12.53 million bpd in 2023 and by another 160,000 bpd to 12.69 million bpd in 2024. The EIA revised its forecasts for crude oil prices from its previous estimates, expecting the Brent spot price to average $79 per barrel in 2023, which is 7.5% lower than its April forecast. The 2024 forecast for the Brent spot price was also revised down – 8.3% to $74 per barrel in anticipation of an increase in global oil inventory. The EIA projected U.S. gasoline prices to average $3.40 per gallon this summer, down from its April forecast of $3.50 per gallon. The downward revision in the U.S. gasoline prices is in anticipation of rising refinery runs from global and U.S. refiners. U.S. refinery runs are expected to reach their highest levels since 2019. The EIA forecast the second most U.S. natural gas consumption for electricity generation on record for May thru September – averaging about 38 billion cubic feet per day (Bcf/d). Coal consumption in the electric power sector is expected to fall 13% in 2023 due to lower natural gas prices, more generation from renewable sources, and coal plant retirements.

The U.S. Bureau of Labor Statistics reported the consumer price index increased (+0.4%) in April, after a (+0.1%) reading in March, (+0.4%) February, and (+0.5%) in January. Over the last 12 months, the all items index is up (+4.9%) before seasonal adjustment as compared to (+5.0%) in March, (+6.0%) in February, and (+6.4%) in January. The index for shelter (+0.4%) was the largest contributor to the monthly all items increase, followed by increases in the index for used cars and trucks. (+4.4%) and the index for gasoline (+3.0%). The index for energy increased (+0.6%), with decreases in indexes for fuel oil (-4.5%), electricity (-0.7%), and natural gas (-4.9%) offsetting an increase in motor fuel (+2.8%). Core CPI inflation which excludes food and energy increased (+0.4%) in April, matching March’s reading, and follows (+0.5%) in February, and (+0.4%) in January. The annual rate of core CPI inflation is now at (+5.5%), as compared to (+5.6%) in March, (+5.5%) in February, and (+5.6%) in January. The shelter index increased (+8.1%) year over year, accounting for over 60% of the total increase in Core CPI. Other indexes with significant increases over the last year include motor vehicle insurance (+15.5%), household furnishings and operations (+5.3%), recreation (+5.0%), and new vehicles (+5.4%).

The Labor Department reported that the Producer Price Index (PPI) for final demand increased by a seasonally adjusted (+0.2%) in April, this follows a (-0.4%) drop in March, (0.0%) in February, and (+0.4%) in January. The PPI is seen as a bellwether for inflation as it measures what suppliers are charging businesses. The PPI index continued to decelerate to an annualized (+2.3%) in April, this follows (+2.7%), (+4.8%), and (+5.7%) reported for the prior three months. The high-water mark was set in March 2022 at (+11.7%). In April, 80% of the increase in the PPI is attributable to a (+0.3%) increase in prices for final demand services, which is the largest increase since a (+0.4%) in November 2022. Over one-third of the increase in the index for final demand services was due to a (+4.1%) increase in prices for portfolio management. The index for final demand goods reported up (+0.2%), with a (+8.4%) increase in prices for gasoline a contributing factor. Conversely, the index for final demand foods decreased (-0.5%), as the index for chicken eggs dropped (-37.9%). Excluding food, energy, and trade services, the so-called core PPI increased (+0.2%) in April. The core PPI continued to decelerate to an annualized (+3.4%) in April, this follows (+3.7%), (+4.5%), and (+4.5%) readings for the prior three months. The high-water mark was set in March 2022 at (+7.1%).

Upcoming Economic Reports:

Tuesday May 16 – Retail Sales (MoM) (April)

Thursday May 18 – Existing Home Sales (April)

Earnings Calendar:

 

Monday	Tuesday	Wednesday	Thursday	Friday
Premium Brands Hldgs (PBH.TO)	Home Depot (HD)	Target (TGT)	Applied Mat (AMAT)	Deere (DE)
Power Corp of Canada (POW.TO)	Keysight Techs (KEYS)	TJX Companies (TJX)	Walmart (WMT)	Foot Locker (FL)