The FCMS Investment Committee is pleased to share the latest insights on the current financial market and economic developments.

Market Perspectives

Here are the top things from our FCMS Investment Committee on current financial markets and economic developments:

1. 1. The S&P 500 Win Streak Continues

      It was more of the same last week as the tech-heavy NASDAQ 100 led the global stock rally. The S&P 500 is now up 16 of the last 18 weeks, gaining over 25% in a winning streak the likes of which was last seen in 1971 (and only a handful of times since index data began in the 1920s). Positioning is getting extended and parts of the market, like profitless tech and crypto, are showing very frothy behavior. A frothy market means asset prices notably differ from intrinsic value. However, fighting such a strong trend in risk assets is hard, especially with the momentum of AI-related stocks. Investors are monitoring key catalysts around that theme, including Broadcom’s earnings this week and Nvidia’s AI conference on March 18, as well as the level of long-term yields, as important indicators.

   2. PCE Meets Expectations

      On the data front, the Fed’s preferred inflation measure, PCE, came in about as expected last week. A pause in the disinflation trend and upside economic growth surprises have lowered Fed rate cut expectations sharply to about three this year from over six to start the year. While rates are still important for the outlook on equities, a potential new direction in yields is something to watch as the 10-year Treasury yield has been stuck around the 4.2% level since the upside surprise to January CPI.

   3. Updates from Fed, U.S. Labor Market, and Economic Policy in China Make for a Busy Week

      Investors are in for a busy week with updates from the Fed, the U.S. labor market, and economic policy in China. Chair Powell may drop hints on monetary policy in his annual testimony to Congress mid-week. The labor market dominates the economic calendar; Friday’s jobs report is especially important. The labor market remains a key pillar to the positive economic outlook. China’s annual National People’s Congress meeting is the major international event of the week. An important point to watch is whether the event can add to recent equity market policy support with a realistic growth target and additional fiscal support for Chinese consumers. China’s actions matter for sentiment around international markets in general, not just emerging markets.

What Happened Last Week?

Here is a recap of the top things that happened last week:

• Stocks rose as mega-cap tech and the AI theme continued to propel equity markets to new alltime highs.
• Retail speculation and flow into more speculative risk assets, such as profitless tech and crypto, may warrant some caution.
• Inflation data came in as expected and hence did not catalyze direction in rates; we are monitoring catalysts for a break higher or lower in yields.

What We’re Watching This Week

Here is a recap of what we’re watching for this week:

• Fed Chair Powell’s testimony on Wednesday and Thursday could serve as a rate direction catalyst.
• Non-farm payrolls on Friday to provide an update on the labor market.
• Outside the U.S., China’s National People’s Congress meeting could confirm or reject the recent rally in the country’s equities prompted by recent policy support.

To receive weekly updates from the FCMS Investment Committee, please subscribe to our blog and follow us on our social media channels for the latest information.

To learn more about FCMS Investment Management, click here.

Securities and Investment Advisory Services offered through Founders Financial Securities, LLC (FFS). Member FINRA, SIPC and Registered Investment Advisor. The commentary in this report is not a complete analysis of every material fact in respect to any company, industry, or security. This material contains the opinions of the author(s) but not necessarily those of FFS, and such opinions are subject to change without notice. This material has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and do not constitute a solicitation to buy or sell any security or product and may not be relied upon in connection with the purchase or sale of any security or device. Index information is intended to be indicative of broad market conditions. The performance of an unmanaged index is not indicative of the performance of any particular investment. Individuals cannot invest directly in any index. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed. Investors should consult their financial, tax, and legal advisors before making investment decisions. Past performance does not guarantee future results. Materials above are produced by Horizon Investments, LLC, which is not affiliated with FFS. © 2022 Horizon Investments, LLC.