Capital Market Outlook

IN THIS ISSUE

• Macro Strategy — Inflation Still On A Downtrend Despite Strong April Readings: Our growth and inflation outlook continues to suggest more downside surprises to corporate revenue and earnings growth in coming quarters.
  
• Market View — Big Wheels Keep on Turning: Evidence from Earnings Season: The deteriorating economic backdrop into Q2 augurs for a larger contraction in Q2 earnings.
  
• Thought of the Week — One Small Step for Congress, One Giant Leap for Resolving the Debt Ceiling: While a bipartisan compromise to raise the debt ceiling combined with limited deficit reduction is the likely outcome, a projected June 1 X-date is looming and still leaves open the possibility of a government default.