Bookends: Monday 03/04/24
Looking Ahead at the Week of Mar. 4th thru Mar. 8th
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:
Happy Monday Everyone!
All good things must come to pass right? Since 1928 the S&P 500 has averaged an anemic .56% gain in March. The news is worse if you look at the market’s performance after starting the year strong. There isn’t a big sample size but, in the same time period, gains in January and February have resulted in an average loss of 2.87%. We have left earnings season and entered the season for taking profits. What is bad news for the S&P 500 may be good news for those of us on Ledger Island. AI mania keeps sucking up all the money that was supposed to go to small-caps, some consolidation and re-balancing could be good news for those small-caps that can make some positive noise this March.
Speaking of making noise, New York Community Bank NYCB 0.00%↑ will be hoping to fly under the radar this week as it tries to stabilize after a disastrous week that saw the already battered regional bank lose 25% of its value after announcing “material weakness” in its internal loan controls. I don’t know what “material weakness” means but signs seem to be pointing to the bank’s $18.3 billion portfolio of loans made to rent-regulated multifamily buildings in New York City. Those loans make up roughly 22% of all of New York Community Bank’s lending. That’s an outlier, which should isolate these issues to NYCB, but the last thing regional banks need is another reason for confidence to be shaky. We still haven’t even started with the reckoning needed to deal with the commercial office space.
This week my eyes will be on NIO’s earnings. I wanted NIO 0.00%↑ to prove to me they could cut operating costs and I’m still looking for that but they’re under fire from all sides. EV sales are down across the board, the Chinese economy hasn’t been kind to luxury purchases, there’s increased domestic competition, and the word “downgrade” has been floating around the analytical world. Any news that comes close to neutral would feel like a win.
Clint’s Outlook:
This first full trading week of March should be an interesting one with the economy on center stage on Capitol Hill this week. Federal Reserve Chair Powell will check in with both chambers of Congress (the House on Wednesday and Senate on Thursday). This will probably be a delicate tightrope act for members wanting to trash a healthy economy in order to make the case for cuts now, and those who want to highlight the economy’s strength but still want cuts now both fueled by the upcoming election in November. Politics aside (if possible) new job data also out this week will hopefully continue the recent trend of meeting expectations and becoming more predictable leading in to the Fed’s March Meeting.
Reports of Note:
WEDNESDAY
Fed Chair Powell on Capitol Hill (House)
Job Openings
THURSDAY
Fed Chair Powell on Capitol Hill (Senate)
Initial Jobless Claims
FRIDAY
US Non Farm Payrolls
US Unemployment Rate
US Hourly Wages
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