Folks the market Bulls are not ready to pass the baton over to the Bears, note yet anyway. Get my take on these markets in today’s Weekly Round-Up.
MARKET SOUND BITES:
Most of the major benchmarks ended the week higher, with Nasdaq joining the S&P 500 in record territory for the first time in over two years. February closed with the S&P 500 marking its strongest beginning two months of the year since 2019.Also note the top 10 stocks in the S&P have a PE ratio that is higher than in 2020, 2010 and even the dot com bubble in 2000. However, we are seeing profit growth with the 2024 estimates coming in at 11% for the calendar year. We are seeing a lot of weakness however in other Global markets with the US markets the shining star thus far.
The defining event of the week appeared to be Thursday’s release of the Core (less food and energy) personal consumption expenditures (PCE) price index. The index rose 2.8% for the 12 months ended in January, in line with expectations, but the report appeared to calm concerns over the earlier release of CPI, which showed core prices rising by 3.9%, above expectations of around 3.7%. The Core PCE price index is generally considered the Feds preferred gauge of overall inflation pressures. The rest of the week’s economic calendar surprised modestly on the downside. The Institute for Supply Management’s (ISM’s) gauge of manufacturing activity came in substantially below expectations, falling from an 18-month high of 49.1 in January back to 47.8 in February.
12 Fed policymakers were scheduled to deliver speeches over the week, and all seemed to echo the recent narrative that they were in no rush to cut interest rates. The futures markets ended this week pricing in a 24.6% chance of a rate cut over the next two policy meetings.
In the Eurozone both headline and core inflation slowed less than expected in February. Annual consumer price growth in the eurozone slowed marginally to 2.6%. Core inflation decelerated to 3.1%, which was above the consensus estimate of 2.9%. And in Germany, annual consumer price growth continued to decelerate in February, to 2.7%. while the seasonally adjusted unemployment rate hovered at 5.9% in February—its highest level in more than two years.
In Japan, the monetary policy backdrop remained highly accommodative, with Bank of Japan Governor K
azuo Ueda stressing that it was too early to conclude that the central bank had met its 2% inflation target in a sustained manner and continuing to signal that prices rising in tandem with wages was a precondition for any shift in its stance. Consumer inflation, as measured by the core consumer price index, slowed in January to 2.0% year on year from the previous month’s 2.3%. On the economic data front, the latest purchasing managers’ index (PMI) data showed that the deterioration in manufacturing conditions worsened over the month of February, amid weakness in both domestic and foreign (notably Chinese) demand.
And in China, February’s economic data continued to paint a mixed outlook. The official manufacturing purchasing managers index fell to 49.1 in February from 49.2 in January—remaining below the 50-mark threshold separating growth from contraction—due to declines in production and exports. The value of new home sales by the country’s top 100 developers slumped 60% in February from the prior-year period, accelerating from January’s 34.2% drop, according to the China Real Estate Information Corp. Sales fell 20.9% from the previous month, a drop that analysts attributed to a sales drought during the LNY holiday.
Enjoy this week’s round-up
Don’t Be A Rat Brain Trader – Be the Red Strip Zebra !!
Trade Smart !
hpb
