Spring will soon be in the air,
US stocks are having a bad run after the fourth consecutive day of declines, with tech having another worse-than-average day, weighing on the broader index. Negative earnings revisions and valuations that could be supported at zero interest rates but not 4.5% are beginning to weigh on stocks, along with recent economic data suggesting, as S&P Global reported in February, flash PMIs a sharp slowing of business growth in the US, accompanied by rising goods prices. Further evidence that Trump 2 euphoria is waning as business surveys have been downbeat, while the latest Conference Board survey of consumer sentiment, published Tuesday and the first since Trump took office, dropped sharply. The nasty whiff of stagflation continues to drift through the airwaves, not only over here but across the pond.
Later today, we get Nvidia, the leader of the Magnificent Seven Pack, reporting. The market anticipates revenue in the latest quarter to be up 72% to $38 billion. The Magnificent 7 Index slid as much as 3.4% Tuesday, extending its drop from a Dec. 17 record past 10%, entering what is known in the market as correction territory. Nvidia’s share price has marked time for 6 months.
Tomorrow will be an important day for US macro as we get monthly Durable Goods orders, which are forecast to bounce back after last month’s drop. The 2nd estimate for the quarter-on-quarter economic growth, jobless claims, PCE prices quarter-on-quarter second estimate, housing sales, and the list goes on of data points for the US economy.
February is traditionally not a good month for stocks, and this one has lived up to expectations. We will soon be ending the 2nd month of the year, and the days really feel as if they are getting a little longer. The chill that has been in the air in the past weeks has gone, for now at least. Daffodils will be starting to poke their head out of the ground; spring will hopefully soon be in the air.
I have a few suggestions for those looking for things to watch, read, or listen to. Blackberry, a recommendation from a friend, is the story of the meteoric rise & catastrophic demise of the world’s first smartphone. Not long ago, everyone had a Blackberry; no investment banker was allowed anything else; today, they had zero market share. It’s on Netflix; where else? To listen to, I would suggest the podcast Acquired, an interview with Charlie Munger at the age of 99. It was interesting to hear Warren Buffet’s long-time friend and partner’s views on leverage, amongst many other topics. To read along the same theme, Warren Buffet’s annual letter to Berkshire Hathaway shareholders, as humble as he was when he started out, I would think.