Stock Market Today: March 27th - 31st, 2023

Top of the morning StonkForumers! Happy Hump Day to all of you and welcome to the new trading day and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are a little over an hour from the cash market open.

GLTA on this Wednesday, March the 29th, 2023!

 

Good Wednesday morning StonkForumers!

Here is this morning's pre-market news thread for those of you wanting to get a quick read before today's open-
<-- click there to read!

Hope everyone has a great trading day ahead!

 

Morning Lineup - 3/29/23 - Global Optimism
Wed, Mar 29, 2023

50 years ago today, the United States officially withdrew from Vietnam ending what was at the time the longest war in US history and easily the least popular. Five decades is a long time, but it’s also hard to imagine how quickly things can change in that time or even shorter.

You don’t need to look at the back of an electronic device or a tag of clothing to realize that China has long been considered the factory to the world. However, beginning under the Trump Administration, China has, for numerous reasons, been losing its allure as a place for companies to source production and manufacturing. That trend was only exacerbated by COVID as shattered supply chains, strict COVID-zero policies, and the desire of companies not to have all their production eggs in one basket all resulted in what has become a wave of diversification. China still remains the dominant global manufacturing source for cheap production, but other countries in the region have picked up share.

Enter Vietnam. The chart below shows the relative strength of the MSCI China ETF (MCHI) versus the VanEck Vietnam ETF (VNM). From 2013 right up through the end of Q1 2020, Chinese stocks handily outperformed China, but right when COVID hit, that outperformance came to a screeching halt. Within a year after the onset of COVID, it became clear that China would maintain its strict COVID policies, investors and manufacturers looked elsewhere. For the next year, Vietnamese stocks crushed Chinese stocks on a relative basis. Over the last several months as China has reopened, some of the outperformance by Vietnam has reversed, but the momentum of Chinese stocks in the years from 2013 through 2020 is a broken trend.



Closer to home, Mexico has also been a winner in the wave of global manufacturing diversification. While it doesn’t have the manufacturing infrastructure of China, for certain applications or sectors, Mexico has been able to pick up share as companies save on the costs and time of shipping and can more easily oversee operations. Given that Mexico’s economy is also one-fifth the size of China, a ‘little’ loss of share in China goes a much longer way in Mexico.

The shift in Mexico’s fortunes has clearly been reflected in the performance of Mexican stocks, especially relative to China. Like the chart above, the one below compares the relative strength of the MSCI China ETF (MCHI) to the MSCI Mexico (EWW) over the last ten years. Again, right up to and in the very early days of COVID, China handily outperformed Mexico, but early in the pandemic, the attractiveness of Mexico started to improve, and in the span of just over two years, Mexico has erased pretty much all of China’s outperformance from the prior eight years. Looking at charts like these is it any wonder that China was quick to pretty much drop all of its COVID restrictions in the last few months?

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Wednesday, March 29th, 2023.

 

Top of the morning StonkForumers! Happy Thursday to all of you and welcome to the new trading day and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are a little under 2 hours from the cash market open.

GLTA on this Thursday, March the 30th, 2023!

 

Good Thursday morning StonkForumers!

Here is this morning's pre-market news thread for those of you wanting to get a quick read before today's open-
<-- click there to read!

Hope everyone has a great trading day ahead!

 

Morning Lineup - 3/30/23 - Play Ball
Thu, Mar 30, 2023

After the Nasdaq 100 closed at the highest levels since Powell's Jackson Hole speech last August, investors are looking to close out the quarter on a positive note. A bunch of economic data just hit the tape, and there weren't a lot of big surprises. Initial Jobless Claims came in slightly higher than expected (198K vs 196K) while Continuing Claims came in modestly below forecasts. The final read of Q4 GDP was revised lower by a tenth of a percent to 2.6% from 2.7%. One piece of bad news was Core PCE which was revised up to 4.4% versus forecasts for a reading of 4.3%. The market reaction to the news has been muted with only a slight ding to the positive tone in futures and a slight upward move in interest rates.

When news surfaced that Secretary of State William Seward had negotiated to purchase Alaska from Russia on this day in 1867, “Seward’s Folly” was widely ridiculed in the press and the public as a waste of money for land that was nothing but ice and frozen dirt. By the late 1800s, Alaska’s main trade of fur had been largely depleted due to overhunting that resulted in the near extinction of sea otters. Also, other minerals couldn’t be mined because of the climate conditions in the area.

Little did anyone know at the time how rich the Alaskan territory was in terms of oil and gold and that advances in mining would make these resources more accessible. In terms of oil alone, according to the Department of Energy, Alaska produced an average of 437K barrels of oil per day last year which works out to roughly $35 million! Seward’s $7.2 million purchase of Alaska translates to $146 million in today’s dollars, so even after adjusting for inflation, the amount of oil that comes out of the ground in Alaska every five days is more than enough to cover what the US paid for the entire state!

There are two important investment lessons that investors can take from “Seward’s Treasure”. First, the largest returns don’t usually come when you’re following the crowd (think tech’s performance so far this year and sentiment towards the sector heading into 2023). Second, no matter how bad an investment may look in the short term, the more time you are willing to give it, the better it will likely look down the road.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Thursday, March 30th, 2023.

 

Gold Gains As Banks Buckle Again, Dollar Dumped

For the third day in a row (ahead of tomorrow's month- and quarter-end and the big PCE print), bonds 'rested' while stocks went wild (this time up... and then back down). Gold rallied as the dollar and bitcoin sold off.

Regional bank stocks slipped back towards the post-SVB lows again, back into the red for the week (not helped by Biden pushing for tighter regs for this cohort) ahead of tonight's Fed bailout data...





Source: Bloomberg

Minnesota Fed's Kashkari opened his mouth around 1330ET and hawkish tones gushed forth, pushing stocks lower.

Richmond Fed's Barkin was more dovish at around 1400ET, hinting at credit tightening (which may reduce needs for hikes) and that policy has lags (hinting at a pause).

Nasdaq outperformed... again... with Small Caps lagging (actually closing in the red on the day). The Dow and S&P rebounded (after Barkin) back into the green on the day...



And as the quarter-end nears, it's clear what's driving the exuberance in long-duration stocks...

Nasdaq heads for one of its best quarters in a decade, up 17% in Q1. Second only to 2022’s Q2 30% rally on the monumental monetary easing during Covid. Both times, the Fed's balance sheet expanded. Latest 10% leg up on the Nasdaq coincided with Fed’s balance sheet adding $400bn pic.twitter.com/na34YcyIwr

— Valerie Tytel (@ValerieTytel) March 30, 2023
'Most Shorted' Stocks squeezed higher at the open once again (to key resistance) but were sold back to unch from there...



Source: Bloomberg

Options traders have priced in a lot of (relative) uncertainty for tomorrow (PCE), but then a jolt lower before rising again into next week's payrolls...



Source: Bloomberg

Treasury yields were modestly lower on the day with the belly outperforming (5Y -3bps) but all yields are still up notably on the week...



Source: Bloomberg

The 10Y yield continued to sleep after its explosion higher Friday thru Monday on the back of a suddenly heavy calendar of issuance...



Source: Bloomberg

The yield curve (2s10s) flattened for the 4th straight day...



Source: Bloomberg

Rate-hike odds picked up hawkishly again today, with May now at 55% odds of 25bps hike...



Source: Bloomberg

The dollar dumped again to its lowest close since Feb 3rd...



Source: Bloomberg

Bitcoin slipped back below $28,000 today (after spiking above $29 k overnight)..



Source: Bloomberg

Gold (June futures) topped $2000 once again, as spot jumped back above $1980...



Source: Bloomberg

Oil prices extended their gains with WTI (May is front-month) back above $74 at two-week highs...



And finally, we note that US equities still screen as expensive vs. the alternatives despite the recent decline in Treasury yields...



Source: Bloomberg

And the S&P 500 NTM P/E of 18x ranks in the 82nd percentile since 1980...



Source: Bloomberg

Do you feel lucky punk?



Given that, maybe you should!

 

Been posting these daily market recaps from ZH up on our live chat server so figured I may do the same in these threads after each trading day as well Hard to believe tomorrow wraps up Q1 already. Where has the time gone?!

 

Top of the morning StonkForumers! Happy Friday to all of you and welcome to the final trading day of the month and quarter and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are a little under 2 hours from the cash market open.

GLTA on this Friday, March the 31st, 2023!

 

Good Friday morning StonkForumers!

Here is this morning's pre-market news thread for those of you wanting to get a quick read before today's open-
<-- click there to read!

Hope everyone has a great final trading day of the month and quarter ahead today!

 

Morning Lineup - 3/31/23 - That's a Wrap
Fri, Mar 31, 2023

A bunch of economic data just hit the tape and it was generally better than expected. Personal Income was slightly better than expected (0.3% vs 0.2%) while Personal Spending was a little weaker (0.3% vs 0.2%). On the inflation front, Core PCE came in lower than expected on both a month-over-month and year-over-year basis. The m/m reading came in at 0.3% versus forecasts for an increase of 0.4% while the y/y reading was also a tenth lower than expected at 4.6%. In response, futures, which were already higher, added a little bit to their gains.

What an interesting quarter it’s been for the stock market. While the S&P 500 is up 5.5%, the Russell 2000 is barely hanging on to gains, and the Dow is actually slightly lower. These all pale in comparison to the Nasdaq which is up 14.8% and the Nasdaq 100 which is up an unbelievable 18.5%. If these gains hold through the end of today, Q1 will go down as the best quarter for the Nasdaq 100 since Q2 2020, and it will mark the 21st quarter in the Nasdaq 100’s history (since 1985) that the index was up at least 15%.

Of the 20 prior quarters where the Nasdaq 100 was up 15%+, its median performance in the following quarter was a gain of 6.1% with positive returns 65% of the time. That compares to an average gain of 4.0% with positive returns 68.4% of the time in all quarters since 1985. When the 15%+ gain occurred in Q1, however, forward returns weren’t as positive. In those six quarters, the median performance in Q2 was a decline of 1.2% with gains just half of the time while the median rest of year gain was 7.5% also with positive returns half of the time. Before reading too much into these numbers, though, we would caution that returns were all over the map. In terms of the rest of year performance, 97 percentage points separate the best (50.4% in 1998) and worst performances (-46.8% in 2000).



Looking at the Nasdaq 100 ETF’s (QQQ) price chart shows an interesting picture depending on your perspective. In the short run, QQQ broke above resistance this week and traded to its highest level since Powell’s Jackson Hole speech in late August. It has also carved out what technicians would describe as a bullish cup and handle formation.



Longer-term, QQQ’s rally has taken it to levels that once acted as support back in the first half of 2021 and Q1 2022. Since that Q1 2022 period there have only been a handful of days that QQQ traded above these levels, and two other times it attempted to make a break of that level it immediately pulled back.

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Friday, March 31st, 2023.

(T.B.A. After Today's Market Close.)