Weekly Newsletter 03/17/25
Good afternoon everyone,
Happy Friday to all of you. I hope it has been a most productive week, and for some us the weekend cant come soon enough. I might as well get right into it because the plethora of excuses and guessing about why the markets are not acting like we want is quite a list. Tariffs, recession to name a few are front and center mostly. Let’s sit down and take a deep breath and think rationally here for a minute. I for one do not like the action but guess what it comes with the territory. This is how capital markets work. I have seen it countless times before and things will settle down and if I knew when believe me I might be somewhere in this world doing for myself but I choose to help all of you navigate the markets especially through difficult times because my money is invested just like yours. Market returns are not linear. We have a chart on our desk and its titled the Greatest chart ever. Over the course of the last 44 years, the SP 500 has had positive results in 36 of those 44, 82% success rate. During each and every one of those years there have been intra year declines of -14%! That’s right folks, think about that, 14%. Look at your statements, check your accounts, its very manageable. We manage the risk here always have to make sure you are not 100% exposed. What you are seeing is forced selling because as long as wall street allows borrowing against holdings, which we do not do, it will lead to forced selling or as we call it margin calls when markets go down, and this is only my opinion. Asset prices have increased by double digits over the last two previous years. Corrections are normal in the cycle of investing. Tariffs have never caused an economic Armageddon. Leverage and excess have lead to corrections. Often times the decisions people make outside the scope of market capital assets have lead to the problems. The likes of the apples and amazons and Mr. Buffet going out of business is highly unlikely and if they do then I might have to rethink what I do because I have been duped! Business goes on and it may not be as robust as wall street likes nut it goes on. I read this morning that even egg prices have dropped by 40% recently, Great make that bacon egg and cheese a double please! I can go on with many more stats for you but that may get boring. If you are concerned lets have a conversation just like we have done so in the past. Remember the most important thing you have is a choice. Imagine if you had a 500K home with a daily ticker above it showing your price everyday like the market assets do. You wake up one day it says 450 or 400, what are you going to do sell? Probably not. if your investment funds are needed for life’s wants and needs then I get it, go for it, use them. Remember they are a tool. In the end this too will resolve itself. There are some good things on the horizon, like lower taxes, less government involvement in the private sector, more entrepreneurial spirit with lower regulations and energy independence to name a few. Some out there are betting against America. I did not vote for President Biden but I sure was not hoping for him to fail. I will take my chances with the good ole USA. Looking at the markets we are off to a good start, US equities higher in Friday morning trading, though a bit off best levels. Comes after stocks sold off again on Thursday with all of the major indexes down over 1% and the S&P ending in correction territory. Stocks on track for a fourth straight week of outsized losses. Today, big tech is broadly higher (though apart from NVDA-US Mag 7s notably lower WTD). Other outperformers include semis, software, oil services, airlines, building products, banks, asset managers, credit cards, chemicals, industrial metals, China tech, and retail-investor favorites. Laggards include HPCs, food/beverage, managed care, pharma, P&C insurers, staples retailers, dollar stores, and telecom. Treasuries weaker across the curve. Dollar index down 0.1%. Gold up 0.4%; earlier broke above $3,000/oz for the first time. WTI crude up 0.3%.
Stocks working on a bounce, though no specific catalyst for the move and oversold conditions remain the go-to excuse. However, some semblance of positive sentiment surrounding dampened prospects of a US government shutdown after Schumer said he would back the House-passed measure, reports of a productive meeting between US and Canadian officials on trade on Thursday, big rally in China stocks on NFRA pledge to boost consumption (and expectations for an RRR cut next week) and agreement between German parties to meaningfully increase infrastructure and defense spending. Elsewhere, earnings takeaways have also leaned positive, though nothing particularly high-profile on the calendar. Still a lot of skepticism about sustainability of any bounce given Trump 2.0 policy uncertainty and continued messaging from Trump administration it is focused on economic rebalancing rather than the stock market. More signs of spillover of policy uncertainty in soft consumer sentiment print.
Preliminary March UMich consumer sentiment printed at 57.9, well below February's 64.0, which was also the consensus. Lowest headline read since November 2022. Report showed another notable jump in inflation expectations (year-ahead to 4.9% from prior 4.3%). Called out high level of uncertainty from respondents which caused a sharp drop in future expectations. Note sentiment readings have attracted outsized attention as of late amid concerns about Trump 2.0 policy uncertainty. Elsewhere, Senate to vote this afternoon to overcome filibuster of the House's CR. Looking ahead to next week, retail sales on Monday the high-profile release amid worries about cracks in the consumer resilience theme. Empire manufacturing and homebuilder sentiment also out on Monday. Tuesday brings housing starts/building permits, import prices and industrial production. FOMC decision on tap for Wednesday, along with updated SEP and Powell press conference. Claims and Philly Fed manufacturing set for Thursday. Fed's Williams speaks on Friday. That’s all for now folks. Our weekly resources are attached. Even though St Patty’s day is Monday, markets are open. Have a great weekend.
Pasquale
Also a quick note. Some of you know that I am a volunteer assistant baseball coach at Bishop Verot Catholic HS in Fort Myers. Well this week our kids were ranked number 1 in the state of Florida as we are 11-0, and we have cracked the top 25 nationally is one of the polls. Great coaching I say!!!!!!!!!
https://www.raymondjames.com/evangelista/resources
"There's the joy of ole' Killarney, in these wishes meant for you; There's a bit of Irish blarney, and a touch of magic too. There's a wish of lots of laughter, and good luck, be sure o' that; And a wish that all your dreams may come true in no time flat." —Irish toast
Thank you,
Pasquale Evangelista
Sr. Vice President, Investments
Raymond James & Associates, Inc.
1421 Pine Ridge Rd. Suite 300
Naples, FL 34109
(239) 513-6528 Direct - (800) 843-2025 -Toll Free - (239) 938-4078 Cell - (239) 596-5474 Fax
Pasquale.Evangelista@RaymondJames.com
www.raymondjames.com/evangelista
This material is being provided for informational purposes only. Expressions of opinion are those of Investment Strategy and not necessarily those of Pasquale Evangelista and are provided as of the date above and subject to change. Any information should not be deemed a recommendation. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the economy, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance does not guarantee future results.
Consumer Sentiment is a consumer confidence index published monthly by the University of Michigan. The index is normalized to have a value of 100 in the first quarter of 1966. Each month at least 500 telephone interviews are reconducted of a contiguous United States sample.
Personal Consumption Expenditures Price Index (PCE): The PCE is a measure of the prices that people living in the United States, or those buying on their behalf, pay for goods and services. The change in the PCE price index is known for capturing inflation (or deflation) across a wide range of consumer expenses and reflecting changes in consumer behavior.
The U.S. Dollar Index is an index of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of U.S. trade partners' currencies. The Index goes up when the U.S. dollar gains "strength" when compared to other currencies. Source: FactSet, data as of 6/16/2023
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stock of companies maintained and reviewed by the editors of the Wall Street Journal. Gold is subject to the special risks associated with investing in precious metals, including but not limited to: price may be subject to wide fluctuation; the market is relatively limited; the sources are concentrated in countries that have the potential for instability; and the market is unregulated. The LBMA Gold Price and LBMA Silver Price are the global benchmark prices for unallocated gold and silver delivered in London. SS&P GSCI Crude Oil is an index tracking changes in the spot price for crude oil. Investing in oil involves special risks, including the potential adverse effects of state and federal regulation and may not be suitable for all investors.
Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary
