Markets are closed today in observance of Good Friday, however this morning, Fed Chairman Jerome Powell had some comments after this morning PCE reading, which both PCE and Core PCE came back in line with estimates. On a monthly basis, PCE of 0.3% was in line with the expectation of 0.3%, as well as the core number of 0.4% was in line with the estimate of 0.4%. Consumer spending was strong at 0.8%, which was ahead of the estimate of 0.5%, showing no signs of the consumer slowing down. In fact, the personal savings rate as of February was at 3.6%. The last time the rate was that low was back in July of 2008. Powell’s comments were pretty unchanged from previous meetings, noting that he’d like to shrink the balance sheet without any economic disruption.
From a performance standpoint, most of the S&P sectors YTD have actually underperformed the benchmark, including the XLK, which is the Technology Sector ETF up roughly 8.4%. The S&P 500 is currently up 10.4% YTD, outbeating small caps of 5.04%. SPY outperformance has been propelled by the Semiconductor Index of a 17.8% gain so far on the year. You could safely say that Materials have so far outperformed the tech sector by 60 bps.
Bitcoin continues to climb higher, briefly surpassing $70K on the week before Powell’s comments sank the currency by over 1%. Fund flows of $617.84M on the week show the Ishares Bitcoin Trust’s 11th consecutive week of inflows. It’s notable that markets have been pretty correlated to the performance of Bitcoin, which raises some question as to how indexes will open on Monday. It would be prudent to also evaluate yields along with forex markets as well to see how investors are digesting the Fed’s tone. Even after Powell’s comments, markets are still pricing in a June cut, and probabilities are falling more in line with the Fed’s projections of 75 bps of cuts on the year.
If you’re curious on how bullish investors are on Nvidia stock, here’s a look at a 2x Leveraged Nvidia ETF, which shows it’s all-time performance of 304%, compared Nvidia’s 114% gain since the inception of that fund. Keep in mind, leveraged ETF’s are highly volatile given the leveraged position in Nvidia. Fund flows on the week showed $102.47M worth of inflows, showing no signs of slowing down.
Boeing stock has been crushed YTD after a very challenging year for the aircraft manufacturer as issues within its fleet distributed to multiple airlines have caused disruptions globally. Within the past year, Boeing saw a drawdown of 26% from its 52-week high, and down 6% within that same span. Since CEO Dave Calhoun stepped down, shares have rebounded 8% from lows.
Financial Knights Association
Source: Koyfin
