The SPX was up 10.2% for the quarter and managed 22 record closes along the way. It was the best performance for the first quarter since 2019. The market has been up more than 8% in Q1 16 times since 1950, the average gain for the rest of the year in those instances was 9.7% according to Dow Jones Market Data. Only one time did the market drop, and that was in 1987.
The Personal Consumption Expenditures Price Index, excluding food and energy, was up 2.8% year over year and 0.3% for the month, matching estimates. Core PCE was up 2.5% and 0.3% compared to estimates of 2.5% and 0.4%.
Consumer spending was up 0.8% for the month, beating the 0.5% estimate.
The VIX closed at the ridiculously low level of 13.01, indicating no fear out in the equity market.
US stocks +2.25%, international +0.76^%, bonds +0.74%, bitcoin -8.2%.
Powell said the Fed is still on pace for three rate cuts this year. This is despite higher-than-expected inflation numbers in each of the last two months. It’s like he wants to make a point that three cuts are coming, no matter what. I don’t get the rush.
Of course, markets rallied on the news.
The 2-year and 10-year treasury yields have now been inverted for about 430 days, the longest streak ever, and still no recession. Everyone was certain the inversion would lead to a recession, but not yet.
US stocks -0.28%, international -0.41%, bonds -1.19%, crude +3.57%.
CPI was up 3.8%, higher than expected.
PPI was up 0.6% in February versus the economists’ estimate of 0.3%.
CPI and PPI have been moving in the wrong direction but the market is acting like everything is just fine and that interest rates will fall later in the year. Economists are generally abandoning their recession calls. Jamie Dimon said the world is pricing in a 70-80% chance of a soft landing. He gives the soft landing 50% odds and 50% for stagflation.
Retail sales were up 0.3% versus an expectation of 0.4%.
Bond yields increase; the 2-year is up by 24 basis points to 4.72%, and the 10-year increased by 22 basis points to 4.31%.’
The S&P 500 has not fallen by more than 2% since October, which is the longest streak in six years.
According to S&P Global Ratings, companies worldwide are defaulting on their debt at the fastest rate since 2009.
The Intelligence Advisors Sentiment Report showed bullishness (of market newsletters) measured at 60.9%. The last time the measurement was greater than 60% was in April and July of 2021.
US stocks -0.18%, international +1.28%, bonds +0.76%.
Nonfarm payrolls increased by 275,000, beating the estimate of 198,000. But January hiring was revised downward by 124,000. The unemployment rate increased to 3.9%. Average hourly earnings were 0.1% higher compared to January. much lower than the 0.5% increase in January.
Through March 1, the SPX has been up 16 out of 18 weeks, the first time that has happened in 53 years, according to Deutsche Bank’s Jim Reid.
The SPX is trading at 21x forward earnings.
Nikki Haley dropped out of the Republican race, setting up a rematch nobody wants. Trump seems to have an edge in the polls, but I think Biden will win. The Democrats have between now and election day to remind everyone of life under Trump, especially January 6th and Trump’s behavior during and after.
