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Market Recap – March 11, 2024

Keel Point

March 11, 2024

The big economic news last week was an encouraging February employment report and a steady-as-she-goes semi-annual Fed report to Congress.  The 10-year Treasury yield declined to 4.08% and the S&P 500 closed the week down 0.26% after being up 16 of the prior 18 weeks. 

  • The 275,000 person rise in non-farm payrolls in February reassures that the economy continues to grow, but is not overheating. December and January employment gains were revised downward, and wage gains moderated. 
  • The unemployment rate increase to 3.9% from 3.7% — highest since January 2022 – reflected a healthy increase of 150,000 workers coming into the labor market. This is good news generally, and especially for the Fed’s interest in seeing labor markets stabilize.
  • February’s Consumer Price Index report tomorrow is expected to show core CPI back to a 0.3% monthly increase with the January blip in housing re-setting.
  • The Fed’s latest Flow of Funds report shows household and nonprofit organization balance sheets with a record $177 trillion in assets against liabilities of $20.5 trillion – the widest asset/liability spread recorded; and the Business Roundtable’s quarterly CEO sentiment indicator breaking back above its historical average for the first time in over two years. Both are positive for stock market performance.  

There is ongoing debate on whether de-globalization will lead to weaker growth and higher inflation after it raised growth and lowered prices over a period of 25+ years. 

  • The concern, as JPM writes, is that the trend could turn us back towards “the 1970s-style stagflation given geopolitical headwinds to global trade that could be exacerbated by the November U.S. elections.” The risk is a conflict tax (against China), deglobalization and higher-cost on-shoring and friend-shoring production.
  • So far, re-shoring from China to Vietnam and India and friend-shoring in the Americas is bringing success to the U.S., which is increasingly linked to Canada and Mexico. The U.S. now purchases more from Mexico than it does from China. 

What to watch this week:  February CPI will report on Tuesday (tomorrow) and Producer Price Index on Thursday.  Consumer Sentiment (U of Michigan) reports on Friday and is expected to be up materially, which is a positive signal for continuing consumer spending. 

 

 

Disclosure:  Securities offered through Keel Point Capital, LLC, Member FINRA and SIPC.  Brokerage and Investment Advisory Services are offered under the Keel Point brand. Investment Advisory Services offered by Keel Point, LLC, an affiliate of Keel Point Capital, LLC. While reasonable efforts have been made to provide data from sources considered to be reliable, no guarantee of accuracy is given. Keel Point does not give tax, accounting, regulatory, or legal advice to its clients.

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