March FOMC meeting Wed is key focus this week. Incoming data likely shows broadening weakess (but is it priced in?). And is $NVDA rally a sign China deal is near? Array ( [cookie] => b00c37-785ac5-8d308d-7f0d08-0f6ebc [current_usage] => 1 [max_usage] => 2 [current_usage_crypto] => 0 [max_usage_crypto] => 2 [lock] => [message] => [error] => [active_member] => 0 [subscriber] => 0 [role] => [visitor_id] => 0 [reason] => Usage under limits [method] => ) 1 and can accesss 1

Heads Up: As I am traveling tonight, I am unable to record a video.

For the first time in awhile (weeks?), the weekend was quiet from a policy perspective (consider last Sunday’s “there will be pain”). And this likely adds to the equity markets regaining composure in the week ahead:

• The most important event this week (barring Washington news) is the Fed’s March FOMC meeting (Wed 2pm ET). The S&P 500 has fallen 10% from its 52-week high, pricing in a 40% probability of a recession and collapsing investor sentiment reflects investor’s concern that neither a Trump “put” nor Fed “put” exists at these levels to put a downside floor to stocks. As our clients know, a few weeks ago, we warned about a possible incoming “growth scare” due to the DOGE cuts and uncertainty, but the damage to equity markets and damage to business and consumer confidence have been deeper than we expected.

• We will get several glimpses to the softening economy. Below is a list of the macro this week:
  – 3/17 Mon 8:30 AM ET: Feb Retail Sales Advanced MoM    0.6%e
  – 3/17 Mon 8:30 AM ET: Mar Empire Manufacturing Survey    -2e
  – 3/17 Mon 10:00 AM ET: Mar NAHB Housing Market Index    42e
  – 3/19 Wed: March Super Granny Update Webinar
  – 3/19 Wed 9:00 AM ET: Mar M Manheim Used Vehicle Index
  – 3/19 Wed 2:00 PM ET: Mar FOMC Decision
  – 3/19 Wed 4:00 PM ET: Jan Net TIC Flows
  – 3/20 Thu 8:30 AM ET: Mar Philly Fed Business Outlook    10e
  – 3/20 Thu 10:00 AM ET: Feb Existing Home Sales    3.94me

• Of these, the Fed’s March FOMC meeting is the most important. While the Fed is not expected to cut interest rates for March, the more important focus will be whether Fed Chair Powell echos his dovish comments seen two Fridays ago. At that time, he noted that during the period of tariff uncertainty in 2019, the Fed ended up cutting rates.
  – the incoming economic data has been even softer in the past two weeks
  – so we would lean towards the idea the Fed is likely incrementally more dovish
• If this is the case, this would remind investors that a Fed “put” (downside protection) exists. And naturally this would put a “floor” on equities, which suffered a waterfall decline in the past few weeks.
• But the incoming economic news is not expected to be positive, but likely will show signs of the economic softness widening. On Monday is Feb retail sales and March Empire Manufacturing. These would probably add to the sense that stalling of consumer and business confidence (from tariff headlines) is slowing activity.
• Do we believe a contractionary downturn is leading to a recession? Not in our view. But we can see why confidence has fallen. After all, tariff headlines impact business expansion decisions. And we know that some USAID cuts have already softened business travel and spending.
  – last week’s U Mich consumer confidence survey shows “vacation plans” at 15-yr lows
  – so we know that consumers and businesses have turned cautious.
• In addition to tariff headlines affecting business and consumer expectations, these policy headlines have an even more adverse impact for Democratic-leaning Americans. About half of the US is Democratic. Trump is already an unpopular figure for these Americans and the added headlines are likely to further further a sharp deterioration in confidence. In other words, to us, we are not entirely surprised that consumer confidence has tanked. But the key question is whether the economy has fallen into a destructive contractionary cycle. We do not believe this is the case.
• If we think incoming headlines will show weaker economic conditions, why are we not calling for more severe downside in equities? We discussed many of these points in recent notes/videos, but here is the rundown again:
  – A tariff resolution could come before April 2
  – even an agreement with one of the 4 regions (Canada, Mexico, China, Europe) would be viewed as progress and a template for the rest
  – Tariff observation: very little “bashing” China and Mexico
  – is a deal with China or Mexico closer than we realize?
  – White House walking back “detox pain” on economy
  – Fed FOMC meeting and rate decision next week
  – Significant pain already inflicted on hedge funds
  – Retail sentiment negative by multiple measures
  – Equity markets oversold in one of the fastest corrections ever
• Another clue to a possible China deal is the fact that Nvidia NVDA -1.48%  rallied 10% last week. If the tariff wars with China were to be escalating, one would expect NVDA -1.48%  to be getting massacred further.
• Some earnings we are watching this week are:
  – Williams-Sonoma WSM 4.11%  (before the open Wed), for signs of consumer
  – Accenture ACN 2.01%  (before the open Thu), for DOGE impacts on consulting spend
• The S&P 500 is down 10% and the Nasdaq down a larger 15%. Markets have priced in a 40% chance of a recession. Given the potential future demand drivers (falling rates, falling taxes), low levels of private sector debt (biz and consumer) and emerging strength in China and Europe, we think 40% seems way too high.
• Mark Newton, our Head of Technical Strategy, would like to see positive follow through before becoming confident a bottom is in place. This is sensible.

Bottom line: We expect Fed put to come back into focus this week, a positive

We believe a lot of bad news is discounted. And while we understand the growing sense of dread, particularly given the broadening signs of weakness, we also know that policymakers do not want to even risk the economy slipping into recession — both Washington/White House and the Fed. Thus, the markets falling 10% are a wake-up call/reminder for both cohorts to be aware of the negative consequences of this tightening of financial conditions.

• Besides, stocks fell so quickly and so sharply, that it is hard to argue that “bad news” is not priced in.
• Monday will be telling, but our expectation is stocks rise this coming week.

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Key incoming data March:

• 3/3 9:45 AM ET: Feb F S&P Global Manufacturing PMI Tame
• 3/3 10:00 AM ET: Feb ISM Manufacturing PMI Tame
• 3/5 9:45 AM ET: Feb F S&P Global Services PMI Tame
• 3/5 10:00 AM ET: Feb ISM Services PMI Tame
• 3/5 10:00 AM ET: Jan F Durable Goods Orders Tame
• 3/5 2:00 PM ET: Mar Fed Releases Beige Book Tame
• 3/6 8:30 AM ET: 4Q F Non-Farm Productivity Tame
• 3/6 8:30 AM ET: Jan Trade Balance Tame
• 3/6 8:30 AM ET: 4Q F Unit Labor Costs Tame
• 3/7 8:30 AM ET: Feb Non-Farm Payrolls Tame
• 3/7 9:00 AM ET: Feb F Manheim Used Vehicle index Tame
• 3/10 11:00 AM ET: Feb NY Fed 1yr Inf Exp Tame
• 3/11 6:00 AM ET: Feb Small Business Optimism Survey Tame
• 3/11 10:00 AM ET: Jan JOLTS Job Openings Tame
• 3/12 8:30 AM ET: Feb CPI Tame
• 3/13 8:30 AM ET: Feb PPI Tame
• 3/14 10:00 AM ET: Mar P U. Mich. Sentiment and Inflation Expectation Hot
• 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

Economic Data Performance Tracker 2025:

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Economic Data Performance Tracker 2023:

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