Bookends: Monday 02/26/24
Looking Ahead at the Week of Feb. 26th thru Mar. 1st
Start your trading week here with Ledger Island Bookend Monday where we look at the stories likely to drive the markets, give you our opinions, and preview what to expect from us in the coming days.
Phil’s Outlook:
On Thursday, LUNR 0.00%↑ became the first private company to land on the moon when their Odysseus craft touched down near its south pole. That news sent the stock soaring before some investors took their short-term gains on Friday. Then news came out over the weekend that Odysseus was on its side, which sent the stock plummeting. A one hundred-million-dollar spacecraft was launched into space using 5000 tons of literal rocket fuel, hurtled roughly 238,900 miles through space, and then executed a controlled descent down 57 miles to become the first American spacecraft to touch down on the moon since 1972. Then it tripped on a rock.
The S&P, NASDAQ, and DOW are all up year-to-date. Of the eleven S&P 500 sectors, only 2 (utilities and real estate) are down since the start of 2024. AAII sentiment survey has 44% of investors feeling bullish about the market 6 months from now. CNN's Fear and Greed index is at a 12-week high of 78 (extreme greed), and BOA indicator says the same thing with a bullish 12-week high of 6.6. The S&P is the belle of the ball, and the numbers say that won't change any time soon.
Here on Ledger Island, that means adjusting my belief about how small caps will perform in 2024. Unless Thursday’s initial jobless claims report is catastrophic, we're still waiting until May for even the possibility of a Fed rate cut. That will continue to pressure small caps, specifically those with a negative EPS. The S&P's strong performance will continue to operate as a money vacuum. Fear of missing out (NVIDIA has projections of $1000) will mean less money going into small caps. Less money and less concentration equals a higher risk for news-driven volatility.
This means that for the next few weeks, my research and focus will be on bolstering the dividend portion of my portfolio. For those of us willing to invest in long holds, the focus on the S&P is going to leave plenty of stocks at a lower price. Multi-year holds that pay even a modest dividend could be a way for people like me, who want to spend less than half their monthly investing budget on a single NVDA 0.00%↑ , to take advantage of this AI fever.
Clint’s Outlook:
Another week of “how good is bad enough” speculation will continue this week. With a new round of housing, retail, wholesale, and labor prints due, I am not expecting the same gut-check volatility in the markets now that March cuts are no longer on the hope meter. Instead, my attention will be to the bond market reactions as there is a lot of Fed speak coming this week (15 in total), and investors are looking towards May as a possible start of an easing cycle. I expect every “pause” and “tense” to be scrutinized as many are desperate to gain insight into the Fed’s intent in the coming months.
On Friday, we talked about Intuitive Machines LUNR 0.00%↑ and the encapsulation of the human spirit as it reaches for the stars in this new corporate-infused 21st-century space odyssey. Over the weekend it was reported that IM-1 didn’t stick the landing. While the lunar lander lays on its side on the moon’s surface, back here on Earth, the stock was being hammered in the pre-market.
Nvidia’s NVDA 0.00%↑ seemingly never-ending rise will continue to spark discussion on whether AI is a “bubble” or “balloon”? A fun game to play at home is to count how many analysts use the term “early innings” in reference to AI. Elsewhere, Amazon AMZN 0.00%↑ makes its debut on the Dow Jones Industrial today, replacing Walgreens Boot Alliance WBA 0.00%↑ , who once upon a time replaced your local corner pharmacy. Circle of life. Also on the Dow today Walmart WMT 0.00%↑ will enact its first ever 3-1 split today.
Quick Update:
As Clint & Phil touched on above Intuitive Machines Inc. LUNR 0.00%↑ which we profiled Friday (02/23/24) has been in a rough news cycle. We have updated our guidance, and you can read it here.
Reports of Note:
MONDAY
New Home Sales
TUESDAY
Durable-Goods Orders
Consumer Confidence
WEDNESDAY
GDP (1st Revision)
US Trade Balance
Retail Inventories
Wholesale Inventories
THURS
Initial Jobless Claims
PCE Index
Personal Income/Spending
FRIDAY
US Manufacturing PMI
Construction Spending
Consumer Sentiment
Coming This Week:
We will be giving you our take on aerogel insulation manufacturer Aspen Aerogels ASPN 0.00%↑ and whether now is the time to be invested or is this just another routine post-earnings high cycle?
Later in the week we will be putting together our NVDA Jet Stream vETF (virtual Exchange-Traded Fund) made up of some of the smaller AI names trending in the wake of NVDA 0.00%↑ SEC disclosures.
Thanks for reading! We'd love to hear from you with any questions or comments you have to share in the discussion below or on whatever platform you found us on. We tend to “chat around.”
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