27 MAR Week of March 20th

27 MAR Week of March 20th


A hopeful start to the week as many waited on abated breath as to what Fed Chair Jerome Powell would do in response to the bank failures over the past week. The markets rallied into Fed decision Wednesday on the hopes of a pause, but J. Powell announced a rate hike of .25% and maintained his hawkish stance on the fight on inflation. Indexes were back and forth for the week but ultimately closed in the green as we saw a rotation from shaky financials into the now deemed value tech sector. However, nothing has changed in the bearish economic data as the consumer continues to struggle with inflation costs. Credit card debt is still coming in at all-time highs nearing $1 Trillion and people are now using the Buy Now Pay Later feature to buy groceries. We remain confident in our defensive positioning as we anticipate the economic fundamentals to continue to be challenging for the near term.

Economic Data:

Tuesday:  Existing Home Sales Accelerate and Weekly Retail Sales Remain Near Cycle Lows

  • February U.S. Existing Home Sales accelerated to 4.58MM, vs. 4.0MM in January -> up 14.5% M/M
  • Back to the highest level since Sept 2022 -> key driver was likely the decline in mortgage rates in February
  • National median home price were down -0.2% Y/Y in February to $363,000 -> FIRST time in 131 months that prices declined Y/Y
  • Y/Y, existing home sales were down -22.6% vs. February 2022
    • First-time buyers were at a historically low 27% in February
  • U.S. Weekly Retail Sales continue to bounce around near cycle lows coming in at +3.2% Y/Y
  • According to a survey from the NY Fed, auto loan denial increased to a 6-year high of +9.1% in February
    • This comes at a time when 30-day delinquency rates on auto loans are near 12+ year highs

Company Earnings:

General Mills (GIS) Q3 results exceeded on top and bottom-line expectations. The company reported Earnings Per Share of $.97 vs. consensus expectations of $.92. Sales grew 16% in Q3, accelerating from 11% in Q2.

  • Pet segment recovered from Q2’s flat growth with growth of 14% in Q3
  • Retail sales grew 18%
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