/ March 21
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Friday:
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Friday:
NIO
Carnival
Daily Briefing
*The rally that followed the FOMC statement did not persist yesterday; there was an attempt at follow through, but that attempt ultimately petered out along with the mega-cap stocks as investors remained pre-occupied with questions -- and no clear answers -- about the economic outlook;
*There was some good economic news, however; existing home sales showed some surprising strength in February as buyers responded to an increase in inventory; it was a good sign along with no real change in weekly initial jobless claims, which continue to run at levels consistent with a solid labor market;
*SPY is not out of the woods just yet; yesterday marked the 3’rd intra-day failed attempt to retake the 200-DMA at $570; as a result, this level is turning into quite the short-term resistance and it’s bad news for the bulls if it’s confirmed as such; given that SPY is no longer “extremely oversold” at the moment, the fuel for a strong reflexive rally is getting weaker by the day; downside stands at $504, while upside is at $590 (50-DMA);
*The MACD is about to signal a positive crossover from deeply oversold levels; this should align with short term strength in the market;
*The Conference Board updated its Leading Economic Indicators Index (LEI), which showed a decline in February;
“The US LEI fell again in February and continues to point to headwinds ahead. Consumers’ expectations of future business conditions turned more pessimistic. That was the component that weighed down most heavily on the Index in February. Manufacturing new orders, which improved in January, retreated and were the second largest negative contributor to the Index’s monthly decline. On a positive note, the LEI’s six-month and annual growth rates, while still negative, have remained on an upward trend since the end of 2023, suggesting that headwinds in the economy as of February may have moderated compared to last year. However, given substantial policy uncertainty and the notable pullback in consumer sentiment and spending since the beginning of the year, we currently forecast that real GDP growth in the US will slow to around 2.0% in 2025.”
-Justyna Zabinska-La Monica, Senior Manager, Business Cycle Indicators, at The Conference Board
*Economic reports corroborated Fed Chair Powell's view from Wednesday that the "hard data," as opposed to soft survey data, is still pretty solid in terms of what it is conveying about economic activity; that point notwithstanding, the specter of reciprocal tariffs being announced on April 2, and a bewildering forecast from the Fed that calls for lower growth and higher inflation in 2025 than previously expected, seemingly curtailed the market's interest in following through on any rebound rally;
*In the options market, dealer gamma exposure remains deeply negative for SPY, translating into increased market volatility in the sessions ahead; the most stable areas of the market appear to be Energy (XLE), Communications (XLC) and Financials (XLF), where market makers are inclined to buy dips;
*In other words, conviction appears to be lacking in the front of lackluster (or insufficient) data on either side of the tape; there were 4 S&P 500 sectors that finished higher, none more than +0.5%, and 8 S&P 500 sectors that finished lower, none more than -0.9%; the biggest gainers were the energy and utilities sectors, and the biggest losers were the high beta Tech and Transports;
*The information technology sector, which is the market's most heavily-weighted sector, ended the day down -0.71%; it was a relative laggard throughout the session due in large part to weakness in Accenture (ACN, -7.3%) following its earnings report, weakness in Apple (AAPL, -0.5%) as reports suggested the company has shaken up its AI leadership ranks, and weakness in the semiconductor stocks;
*The Philadelphia Semiconductor Index was down -0.7%; it would have been worse if not for the outperformance of NVIDIA (NVDA, +0.9%);
*The Treasury market for its part also saw some vacillation; earlier, the 10-yr yield dropped to 4.17%, but crept back up to 4.25% before settling at 4.23%; Treasuries, like the other capital markets, digested a slate of central bank news, most notably from the PBOC and the Swiss National Bank (which delivered a 25bps rate cut);
*TLT finished the day largely unchanged, up by +0.07%;