Weekly Macro Minute

GuideStone Reflections

And Moses built an altar and named it, “The Lord Is My Banner.” He said, “Indeed, my hand is lifted up toward the Lord’s throne.”

Exodus 17:15-16, CSB

While the Israelites wandered the wilderness, they came under attack by the Amalekites. Moses led a strange counterattack. He stood atop a hill overlooking the battle site, staff in hand. The Israelites prevailed as long as he held the rod up. But when he became exhausted and dropped it, the struggle turned against them. So Aaron and Hur stood on either side of him, supporting his arms to keep the staff aloft. In the end, the Israelites won. As a memorial, Moses built an altar and named it after the Lord, calling it “The Lord is my Banner,” which we traditionally translate as Jehovah Nissi.

Now, if you’re unfamiliar with this story, God sounds capricious. But this was a moment of symbolism. The Israelites faced a superior force and could only win if God fought for them. By tying the fortunes of the battle with the motions of Moses’ arms, the warriors would know that something supernatural was happening. The victory was theirs as long as the Israelites remained “under” the Lord.

Ephesians 6:12 tells us that Christians are engaged in spiritual warfare as real as the battle the Israelites fought against the Amalekites. Just as the Lord won the victory for the Israelites, Christ – through his death and resurrection – has won the victory for us. But the battle still must be fought.

The banner (Moses’ staff) represented the presence of God. When Moses held it as the centerpiece of their battle, they won. When it lost its center place because Moses was weary, they lost. We win our spiritual battles by remaining under the banner of Christ – ensuring that His presence is the centerpiece of our lives. His presence makes the difference. Satan’s goal is to make us forget what banner we are marching under. He wants us to obsess over the problem, get angry at the person bringing us trouble, or get wrapped up thinking we’ve got this ourselves. It’s only the uplifted presence of Christ in our lives that will win the spiritual war.

But remember, Moses couldn’t hold the banner up forever by himself. He needed help. Spiritual victory is won in spiritual community. We’ll likely lose if we fight a spiritual battle nobody else knows about. We need brothers and sisters in Christ around us to support us in keeping Christ’s presence exactly where it should be – as the banner over us.

Across the Markets

In aggregate, global stocks ended moderately higher, with U.S. stocks up less than 1% on mixed macro and earnings data. The best-performing sectors included financials, energy, and industrials, while the worst-performing sectors were real estate, utilities, and technology. A number of the big banks – JPMorgan Chase, Wells Fargo, Citigroup – reported big beats for earnings on Friday, benefiting from deposit flights from smaller rivals. Thus, despite last month’s turmoil in the banking sector, financials are expected to have positive first-quarter earnings in the face of a 6.5% year-over-year decline in earnings expected for the S&P 500® Index. Oil prices marched higher this week on continued supply fears from OPEC Plus’ surprise 1.2 million barrel cut on April 2. WTI closed at $82.52/bbl, and the International Energy Agency predicted further price gains ahead of a substantial supply deficit for the second half of 2023. Higher oil prices would put renewed pressure on inflation, bring more pain to consumers, keep the FOMC hawkish and thus apply downward pressure on risk assets. Treasury prices rose across the curve this week by about 10 to 20 basis points, with the 10-year closing at 3.51%.

European shares rose strongly on better-than-feared growth prospects. Eurozone industrial production outpaced expectations with 2.0% year-over-year growth, and the UK may have skirted a Bank of England forecasted first-quarter recession. GDP was up 0.4% in January but flat in February. Like in the U.S., yields rose across the curve as the market anticipated more hawkish European Central Bank action. Some policymakers supported another 0.50% rate hike at the next meeting on May 4. In Asia, Japanese equities soared, as sentiment was buoyed by Warren Buffet indicating he would increase investments in Japan. Furthermore, Ueda was sworn in on April 9 as the new Bank of Japan governor and gave remarks perceived as dovish, supporting market sentiment.

In the Economy

March’s highly anticipated Consumer Price Index (CPI) release showed a weaker-than-expected headline figure, up only 0.1% month-over-month and 5.0% year-over-year. However, the more important core CPI (ex. food and energy) rose 0.4% month-over-month and 5.6% year-over-year, roughly in line with expectations. Core services inflation remains sticky, highlighting that the disinflationary march towards the Federal Reserve’s 2% objective is still very much in its early stages. The FOMC minutes from the March meeting suggested policymakers are more worried about “unacceptably high” inflation than the seemingly contained recent banking crisis. Furthermore, minutes revelated that “participants generally saw risk to inflation as weighted to the upside.” The current run-rate for core CPI continued through year-end would imply near 5% core inflation, and yet surprisingly, the market is still pricing in 50 basis points of rate cuts between now and year-end (from current levels), or 75 basis points of cuts after an expected hike May 3 (80% priced in). We view this as unlikely as the Fed clearly views some economic weakness as necessary to ensure inflation reaches 2% – however, the market remains unprepared for this. The minutes revealed a steely hawkish Fed despite staff advisors forecasting a “mild recession” later this year due to expected tighter conditions following the banking crisis. Declines in the Producer Price Index (PPI) and import and export prices released this week were moderately encouraging and buttressed the disinflationary narrative. Still, as noted above, we must bear in mind that energy prices picking back up will be a headwind for further improvement. Meanwhile, headline retail sales declined 1.0% in March on a nominal basis in a sign the consumer’s spending habits are weakening. Still, GDP trackers have first quarter GDP up approximately 2.5% (i.e., no recession yet).