VIDEO: It is clear markets are most bothered by tariffs, which go into effect just past midnight on 3/4. With the surge in VIX, and hedge fund positioning lightening, it does set up for good risk/reward for the remainder of the week
Please click below to view our Macro Minute (duration: 4:17).
With the jobs report this Friday, this week is on track to be an important one for markets. While jobs could potentially come in weak, this would set the stage for the Trump put and Fed put to be put back into play.
- Rocky start to the week with markets dropping on Monday.
– Investor nerves were rattled primarily by President Trump’s announcement that 25% tariffs on Mexico, Canada, and China would begin on Tuesday.
– Tariff talk hasn’t been this prominent in earnings call transcripts since 2019, reflecting genuine investor concern around policy uncertainty and potential economic disruption.
– Tuesday evening presents another potential market catalyst as President Trump addresses the joint session of Congress.
- According to Fundstrat’s Head of Policy Strategy, Tom Block, this address faces a notably complex landscape
– Covering everything from tariffs and government shutdowns to international relations, immigration, crypto policy, and DOGE.
– Given the broad range of topics, market participants will likely remain cautious, assessing potential policy shifts and legislative implications. - Wednesday adds further focus as Treasury Secretary Scott Bessent addresses the Economic Club of New York.
– Bessent’s speech will be watched closely for signs of what the White House measures as success, especially regarding interest rate policy.
– Expect significant market reaction if Bessent signals renewed willingness to support markets - On Friday, investors face two crucial events: the jobs report in the morning and Fed Chair Powell’s address at 12:30 PM.
– A weak jobs report, though initially unsettling, might ironically reassure investors by putting the “Fed Put” firmly back into play
– Powell’s commentary will be equally scrutinized for clues on the speed of rate cuts or other supportive measures. - Positioning suggests downside from tariffs might already be significantly priced into the market.
– Hedge funds have notably unwound excessive long positions from the prior year and are no longer in stretched territory.
– Additionally, the VIX hitting 24 signals investor anxiety approaching a peak—a historical precursor to market stabilization or rally. - Mark Newton notes the technical backdrop now suggests favorable risk-reward dynamics in equities.
– Newton identifies a critical support at 5,773 on the S&P 500 Index
– Consequently, while Tuesday’s session might be jittery ahead of Trump’s address, any stabilization post-event could encourage markets to resume an upward trajectory.
Bottom line: Stay on target, remember “Fed Put” and “Trump Put”
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Key incoming data March:
3/3 9:45 AM ET: Feb F S&P Global Manufacturing PMITame3/3 10:00 AM ET: Feb ISM Manufacturing PMITame- 3/5 9:45 AM ET: Feb F S&P Global Services PMI
- 3/5 10:00 AM ET: Feb ISM Services PMI
- 3/5 10:00 AM ET: Jan F Durable Goods Orders
- 3/5 2:00 PM ET: Mar Fed Releases Beige Book
- 3/6 8:30 AM ET: 4Q F Non-Farm Productivity
- 3/6 8:30 AM ET: Jan Trade Balance
- 3/6 8:30 AM ET: 4Q F Unit Labor Costs
- 3/7 8:30 AM ET: Feb Non-Farm Payrolls
- 3/7 9:00 AM ET: Feb F Manheim Used Vehicle index
- 3/10 11:00 AM ET: Feb NY Fed 1yr Inf Exp
- 3/11 6:00 AM ET: Feb Small Business Optimism Survey
- 3/11 10:00 AM ET: Jan JOLTS Job Openings
- 3/12 8:30 AM ET: Feb CPI
- 3/13 8:30 AM ET: Feb PPI
- 3/14 10:00 AM ET: Mar P U. Mich. Sentiment and Inflation Expectation
- 3/17 8:30 AM ET: Feb Retail Sales Data
- 3/17 8:30 AM ET: Mar Empire Manufacturing Survey
- 3/17 10:00 AM ET: Mar NAHB Housing Market Index
- 3/19 9:00 AM ET: Mar M Manheim Used Vehicle index
- 3/19 2:00 PM ET: Mar FOMC Decision
- 3/19 4:00 PM ET: Jan Net TIC Flows
- 3/20 8:30 AM ET: Mar Philly Fed Business Outlook
- 3/20 10:00 AM ET: Feb Existing Home Sales
- 3/24 8:30 AM ET: Feb Chicago Fed Nat Activity Index
- 3/24 9:45 AM ET: Mar P S&P Global Manufacturing PMI
- 3/24 9:45 AM ET: Mar P S&P Global Services PMI
- 3/25 9:00 AM ET: Jan S&P CoreLogic CS home price
- 3/25 10:00 AM ET: Mar Conference Board Consumer Confidence
- 3/25 10:00 AM ET: Feb New Home Sales
- 3/26 10:00 AM ET: Feb p Durable Goods Orders
- 3/27 8:30 AM ET: 4Q T GDP
- 3/28 8:30 AM ET: Feb PCE Deflator
- 3/28 10:00 AM ET: Mar F U. Mich. Sentiment and Inflation Expectation
- 3/31 10:30 AM ET: Mar Dallas Fed Manuf. Activity Survey
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