(SLOWING ECONOMIC DATA MAY SHIFT THE FED INTO REACTIONARY MODE)
March 18, 2024
Hello everyone,
We are in for an action-packed week with central bank meetings taking place around the world. Inflation remains the sticking point. The Fed could hold tight for longer – weakening the economic landscape – and then go into overdrive at year end – by loosening the reins at top speed to stop us from sliding into a deep recession.
Investors will digest statements from the FED and gain some insight on what the plan for interest rates is going forward.
The risk is that the Fed will lean a little hawkish, which would throw cold water on the recent equity rally.
If no changes are mentioned, it will be benign for the markets, however, if fed funds rate projections move higher, which means fewer rate cuts, that is going to be seen as a negative for markets and will result in volatility, both in fixed income markets and equity markets.
Interestingly, some market observers believe the Fed will have to cut more than it, or markets, are currently anticipating, regardless of what the central bank signals this week.
Softening economic data as well as the pressure of the Fed’s extensive tightening campaign, could well slow economic growth markedly by year-end, and consequently, we may see the Fed cut five times, even if they signal just three in their plan. Some analysts are anticipating a 20%-35% downside for stocks that won’t bottom until next year.
Better get that insurance in place now. SDS is for those cloudy days when those recessionary drums start pounding. Don’t leave that until the last minute. There is also insurance you can buy for your tech stocks. Have a look at (PSQ) Pro Shares Short QQQ or (QID) Pro Shares Ultra Short QQQ.
Flying under the radar has been the Energy and Commodities Sector. Stocks in this sector have been quietly moving to the upside. Most investors have had their attention glued to the tech sector.
On February 7, 2024, my newsletter was titled Three Stocks to Buy in 2024. These stocks were Microsoft (MSFT), Barrick Gold (GOLD), and ExxonMobil (XOM). At the time MSFT was sitting at $403.66, GOLD was priced at $15.09 and XOM was at $102.20. In this newsletter I recommended that subscribers buy small parcels of stock – average in – and purchase LEAPS on these stocks – and suggestions for strikes and expiration times were given.
MSFT is now at $416.42. GOLD is at $15.76.
(XOM) was around $102 when I issued a recommendation to purchase small parcels of the stock and out of the money LEAPS. The stock is now trading near $111.00. If you took my advice, you would be sitting in a good position now. Even though (MSFT) and (GOLD) could retrace a little from their recent highs, they will resume their uptrend after taking a breath and march on to higher targets over the next year and beyond.
Be patient.
Week ahead calendar
Monday, March 18, 2024
10 a.m. NAHB Housing Market Index
Japanese Interest Rate Decision
Previous: -0.1%
Time: 11:00 pm
Tuesday, March 19, 2024
8:30 a.m. Building Permits SAAR (Preliminary)
8:30 a.m. Housing Starts
Canada Inflation Rate
Previous: 2.9%
Time: 8:30 am
Wednesday, March 20, 2024
2:00 p.m. FOMC Meeting
2:00 p.m. Fed Funds Target Upper Bound
Earnings: Micron Technology, General Mills
Thursday, March 21, 2024
8:30 a.m. Current Account SA
8:30 a.m. Continuing Jobless Claims SA
8:30 a.m. Initial Claims SA
8:30 a.m. Philadelphia Fed Index SA
9:45 a.m. PMI Composite SA preliminary
9:45 a.m. Markit PMI Manufacturing SA preliminary
9:45 a.m. Markit PMI Services SA (Preliminary)
10 a.m. Existing Home Sales SAAR
10 a.m. Leading Indicators SA M/M
UK Interest Rate Decision
Previous: 5.25%
Time: 8:00 am
Earnings: Nike, FedEx, Darden Restaurants
Friday, March 22, 2024
UK Retail Sales
Previous: 3.4%
Time: 3:00 am
Cheers,
Jacquie
