The sun himself is weak when he first rises, and gathers strength and courage as the day gets on, Dickens.

The first part of the first week of the new quarter saw equities fall as the investment community again started questioning when and possibly if the Federal Reserve will cut interest rates this year, along with a spike in the oil price. This interest rate uncertainty was increased as Friday’s employment number blew the lights out. 300,000 jobs were created in March, well ahead of market expectations. The strong employment report did nothing for bond investors as the unemployment rate fell from 3.9% to 3.8%. Still, it did seem to help stocks as equity investors took this as a further indication of the resilience of the US economy. Overall, the rally on Friday was not enough to stop US equities from having a down week. The Dow Jones index had its worst week in over a year. The market has gone from pricing in a near 70% chance of a rate cut in June to less than 50%.

The real problem for the Fed will be the ever-approaching US election; the closer we get, the less the Fed wants to be seen influencing outcomes, which may make them even more reluctant to cut in the third quarter. Conversely, that may encourage them to stick with June and leave it there for a while.

This week, there is something for everyone; the focus will turn to earnings as the Banks start reporting. JP Morgan, Wells Fargo, and Citi will lead the way on Friday. There is also more inflation data from the US, as well as the minutes from the last FOMC meeting. On Tuesday small business optimism. In Europe, the focus will be on Thursday at the monthly ECB meeting. There have been some signs of an improvement in the euro area economy recently, and we shall see if Christine Lagarde reinforces the view that Europe will at least introduce its first rate cut in June.

As for the UK, we get the British Retail Consortium monitor, where there are some hopes that as wages are now rising in real terms, there will be some recovery in the consumer’s appetite to spend. We also have had the Easter break, three days at least to go shopping. On Friday, we get the monthly GDP report. The recent recovery in the PMIs should indicate that February’s reading should reflect some economic growth in the first quarter.

Things to be wary of: Stocks may have cooled slightly in the past week, but stock indexes remain close to their highs. The Vix fear index is also at its high for the year, which may be telling you that in some quarters, speculators are preparing for more of a correction. As you know I do not comment often on Bitcoin, but it can act as something of a lead sentiment indicator for risk appetite. Recently the crypto coin has come back by just under 10%.