March Seasonality
Choppy Waters or Smooth Sailing?
Preface
There’s been a healthy pullback across the board, with the S&P500 giving back 60% of its gains year-to-date and Bitcoin surrendering 25%.
I can’t recall a time in recent history where an asset rally has felt so hated. Many prognosticators are still calling for stocks to make new lows in 2023 and take out the October or December lows.
If you ask me, many will wait for prices that never come. That’s my opinion of course, and not financial advice.
Economic Calendar
Highlights
- Durable Goods Orders – Monday
- ISM Manufacturing PMI – Wednesday
- ISM Non-Manufacturing PMI – Friday
- Several Fed speakers
Breakdown
Durable Goods Orders – Monday
Durable goods orders measure the cost of orders received by manufacturers of goods meant to last at least three years – such as motor vehicles and appliances. These durable products usually entail large investments, and are thus quite sensitive to the overall US economic situation.
The January numbers are expected to show that higher borrowing costs are putting pain on manufacturers in a big way. Consensus view is a 180 reversal from the December spike. If true, that could help moderate the ongoing US dollar strength.
ISM Manufacturing PMI – Wednesday
On Tuesday we get a lead in with CB Consumer Confidence numbers ahead of ISM Manufacturing PMI on Wednesday. Both have potential to influence the dollar higher if they beat estimates.
ISM Non-Manufacturing PMI – Friday
On Thursday we’ll get a lead in with jobless claims, which are expected to remain relatively unchanged over the prior week. The services sector outperformed in January and is expected to post further gains in February with a rating in the mid-50s.
A tight labor market, along with an uptick in consumer confidence and a larger boost in service sector activity could bring 75 basis point rate hikes back into consideration. An outside chance, but I wouldn’t rule it out.
Fed Speakers
Jumping into the spotlight this week will be new Fed member Austan Goolsbee who is scheduled to comment on Tuesday. We haven’t heard much from Goolsbee yet, but the Chicago Fed President is considered a dove by Wall Street economists.
Philip Jefferson will address inflation and the dual mandate on Monday, while Christopher J. Waller will talk about the Fed’s outlook on Thursday. On Friday we will hear from Lorie K. Logan, Raphael Bostic, and Michelle W. Bowman.
Earnings
A few notable names reporting this week are Berkshire Hathaway, Costco, Target, Lowes, Broadcom, Salesforce, Dell, and Zoom.
March Seasonality
Recency bias could have us peg March as a bad month for markets. While 6 out of the last 10 have finished net positive, the 2020 crash skews our data set. We have to be careful about over-fitting a bias based on this, but stay with me…
If we zoom out to the 20 or 30-year trend, odds swing in favour of positive returns around 65% of the time. That’s not too bad at all!
Sponsors Corner
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Jay Charles
Editor in Chief, The Trading Tank.
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