Mar 305 min
by Ben Weiss, for the Call to Leap Team
Happy Friday, everyone! And Happy Easter weekend for those celebrating. If not, there's lots of college basketball March Madness to watch this weekend (my favorite sport). And if that's not for you, today is also National Lemon Chiffon Cake Day, a tasty way to kick off the weekend!
With spring in the air and cherry blossoms in bloom for us here on the East Coast, I feeling a sense of rejuvenation and gratitude for being part of the CTL community with you all. 💙But enough sappiness 😂 Let's take a look at what happened this week and what's coming up...
The market this week
You might not guess it by looking at the heat map above, but the S&P 500 notched a fresh all-time high this week, capping the strongest first-quarter start to a year since 2019. As you can see, most of the megacap Magnificent 7 stocks had flat or negative performances with META, NFLX, and AAPL sliding down the most. META, MSFT, and GOOGL in particular are hovering and consolidating near their respective all-time highs, and with earnings season on the horizon, I'll be watching closely to see if these stocks make a move out of their consolidation in either direction, potentially pushing their ceilings higher or correcting back down some.
By the numbers, the S&P 500 (+0.23%), Dow Jones (+0.08%), Nasdaq (-0.05%), Russell 2000 (+1.26%) mostly had a flat week overall, though each index rallied to close out the week on an uptrend after a choppy start.
In the news
Steady as she goes...In inflation news, we received data on the personal consumer expenditures (PCE) price index this week—one of the Federal Reserve's favorite gauges for measuring progress on cooling inflation. The PCE measures what people in the US pay for goods and services, and the "Core PCE", specifically, excludes the more volatile food and energy categories from the calculation to give a clearer long-term picture of inflation trends.
The US Bureau of Economic Analysis announced Core PCE rose 0.3% in February and 2.8% year-over-year, both numbers arriving inline with expectations. While December 2023 and January 2024 PCE data were revised this week to be slightly higher than originally reported (not what we wanted to hear), we did learn that consumer spending shot up 0.8% in February—nearly double the expectation—and personal income increased modestly by 0.3%. To me, these numbers continue to suggest a robust business environment and economy at large, with work left to be done to push inflation down the Fed's goal of 2% annually. The stock market was closed today for Good Friday when this inflation data was announced, so we'll have to wait until Monday to see if Wall Street agrees with my outlook.
Remember: Modest inflation is actually a good sign for a healthy economy. At a basic level, more jobs, higher wages, and healthy demand for companies' goods and services naturally causes inflation over time. Deflation (the opposite of inflation) can lead to a recession or, worse, a depression—not good! So keep in mind when we hear lots of talk about how "bad" inflation is, very high inflation (also called hyperinflation) is not good—like what we saw in 2020—but inflation by itself is not necessarily bad. As Fed Chairman Jerome Powell reiterated, "We are at a place where the economy is strong."
Check out other points in past decades where major events caused periods of higher inflation.
Across the pond...Stock markets across Europe are trending bullishly as well, notching impressive first quarter performances of their own, rising nearly 7% since the start of 2024. Along with US progress, inflation data from European markets also demonstrates cooling inflation from historical highs since 2020.
March Madness brings April tax-ness...With online gambling becoming legal in more states in the US, college basketball enthusiasts are expected to bet over $2.7 billion on the NCAA basketball tournament games this spring. Wow, that's a lot of cheese! And yes, the IRS will be taxing those winnings. Get ready to fill out your W-2G form! Me? I'm sticking to investing in the stock market.😉
SPY
On the daily charts for both SPY and QQQ, you'll see two sets of channel lines (orange and green). I continue to observe a secondary, steeper bullish trend which the two indices seem to be following.
On SPY, the skinnier, steeper green channel appears to be narrowing slightly or "consolidating" so I'll be watching to see if SPY breaks out in either direction from the channel lines or if it continues to ride inside the channel for longer.
On QQQ, the steeper green channel appears to be widening slightly. With earnings season coming up in about 2 weeks, I'll be watching to see if the megacap stocks move up or down significantly, potentially dragging the S&P 500 and Nasdaq indices with them.
Do you agree with how I drew my lines or do you see it differently? Let's chat on Discord!
QQQ
You got this, everyone! Stay disciplined, pay yourself first, and always invest in your greatest asset—yourself. As always, let us know if you have any questions. 🙌🏻
-Ben and Steve
Friendly reminders from Steve and Ben:
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Let your money work harder for you...
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