“I always try to teach by example and not force my ideas on a young musician. One of the reasons we’re here is to be a part of this process of exchange.” – Dizzy Gillespie
Chart of the Day
Good morning!
The stock-exchange business is a tough one. Competition is fierce, and getting fiercer. Last week, Nasdaq announced plans to seek regulatory approval for 24-hour stock trading, seeking to keep up with similar previous moves made by the NYSE Arca and the CBOE – and with broker-dealers like Robinhood and Interactive Brokers.
U.S. exchanges might soon see a new rival emerge, as the TXSE seeks regulatory backing for a new exchange in Dallas. The exchange, which counts BlackRock and Citadel Securities among its backers, hopes to benefit from Texas’s recent bid to become a center of finance rivalling New York and to attract companies with fewer so-called “woke” rules such as those regarding board diversity. The NYSE isn’t taking this potential threat lightly: on Feb. 12, it announced plans to move its Chicago-based electronic exchange to Dallas in what some saw as a response to the TXSE’s plans.
Yet outside of NYSE and Nasdaq exchanges, other U.S. rivals have struggled to capture significant market share, and some question whether the Texas Stock Exchange can succeed where others have failed. “I don’t think [TXSE] has articulated a business case for the benefits to the trading community,” suggested Jesse Forster, senior analyst for market structure and technology at Coalition Greenwich.
Regardless, U.S. exchanges can also expect to face continued competition from overseas exchanges, as globalization has served as a source of both increased opportunity and competition. U.S. exchanges still benefit from the belief that a U.S. listing can boost stock valuations. However, that’s a hypothesis that the Financial Times disputed yesterday. In an admittedly small sample pool of 12 European-listed companies that have added U.S. listings since 2016, the financial broadsheet found that six companies saw their P/E-based valuations fall, though most benefited from increased liquidity. “The basic thesis that you move to the U.S. and your share price improves is not right,” Richard Werner, partner at law firm BCLP, told the FT. “It’s definitely not as straightforward as that.”
Straightforward or not, this thesis is partly why the London Stock Exchange has stumbled in recent years: Even lobbying from the British government failed to dissuade Softbank’s ARM in 2023 from moving its primary listing to Nasdaq, and iconic Anglo-Swiss mining giant Glencore shook exchange officials last month when CEO Gary Nagle told reporters the company was similarly considering moving its primary listing away from London to New York.
It might be that a new overseas rivalry could materialize further down the road. Last year, India’s National Stock Exchange led global stock exchanges in funds raised through IPOs (268 listings, USD 19.5 billion total), handily beating the numbers notched by the NYSE and Nasdaq (along with rivals in Asia) and boosting speculative hopes for its own IPO. While IPO metrics alone do not make for stock-exchange dominance, they provided a notable contrast to the U.S., where President Donald Trump’s vacillating policy stances appear to have at least partially and temporarily dampened high hopes for a more IPO-friendly environment during his second term.
Meanwhile, the emerging popularity of dark pools could mean that the exchanges are fighting for a shrinking revenue pool. Once controversial, dark pools now account for a growing share of U.S. stock-trading volume. Bloomberg data suggests in fact that the majority of trading in U.S. stocks occurs off of the secondary exchanges – 51.8% of trading as of January 2025. There are debates about whether investors need to be concerned about how this affects the efficiency of markets and the share-price discovery process. What’s undebatable, however, is that when shares are traded off an exchange, the exchange does not get to collect fees on those transactions.
Catch Up With Fundstrat
Markets found footing to start the week, supported by the absence of tariff escalation headlines, providing some relief amid broader macro uncertainty. Investors appear to be taking a pause, digesting the recent sharp pullback and assessing upcoming catalysts. The relative calm around trade tensions from Washington has helped stabilize markets, following what has been a challenging few weeks.
TECHNICAL
While many are eager to know if “the bottom is in” or not, it will take a while longer before we are able to say with confidence that major U.S. Equity market lows are in place. Elswhere, China’s Large-Cap ETF from Ishares has reached the highest levels since early 2022, and arguably some stalling out is possible this week.
CRYPTO
Today’s bounce on “bad news” and rising Fed liquidity both support a bullish rebound. However, with no clear return of inflows into crypto, we still like playing defense ahead of this week’s FOMC.
News We’re Following
Breaking News
- Israeli strikes kill hundreds, tipping Gaza back toward war WSJ
- Trump to speak to Putin Tuesday about Ukraine war SEM
Markets and economy
- US retail sales in February miss expectations SEM
- Trump picks Fed Governor Michelle Bowman to replace Michael Barr as Fed’s supervision head CNBC
- Nippon Steel, U.S. Steel lawsuit gets extension to continue government negotiations WSJ
Business
- Google taps MediaTek for cheaper AI chips INF
- Forever 21 files for bankruptcy in the US BBC
- BYD unveils battery system that charges an EV in five minutes BBG
- Klarna, nearing IPO, plucks lucrative Walmart fintech partnership from rival Affirm CNBC
- Google in fresh talks to buy cybersecurity startup Wiz for $30 billion WSJ
Politics
- White House denies defying judge’s order over deportations to El Salvador BBC
- Brown University tells international students, staff to avoid travel abroad WSJ
Overseas
- Lithuania accuses Russian intelligence over Ikea store fire in Vilnius BBC
Of Interest
- Harvard University to go tuition free for household incomes up to $200,000 BBG
| Overnight |
| S&P Futures -3
point(s) (-0.0%
) Overnight range: -25 to +6 point(s) |
| APAC |
| Nikkei +1.2%
Topix +1.29% China SHCOMP +0.11% Hang Seng +2.46% Korea +0.06% Singapore +0.92% Australia +0.08% India +1.35% Taiwan +0.69% |
| Europe |
| Stoxx 50 +0.88%
Stoxx 600 +0.8% FTSE 100 +0.48% DAX +1.17% CAC 40 +0.64% Italy +0.96% IBEX +0.91% |
| FX |
| Dollar Index (DXY) -0.05%
to 103.32 EUR/USD +0.27% to 1.0951 GBP/USD +0.08% to 1.3003 USD/JPY +0.38% to 149.78 USD/CNY -0.04% to 7.2232 USD/CNH -0.04% to 7.2242 USD/CHF -0.14% to 0.8797 USD/CAD -0.08% to 1.4277 AUD/USD +0.02% to 0.6385 |
| Crypto |
| BTC -1.08%
to 83054.26 ETH -1.44% to 1907.34 XRP -2.65% to 2.2866 Cardano -1.34% to 0.7087 Solana -2.7% to 125.3 Avalanche +2.27% to 19.26 Dogecoin -3.17% to 0.168 Chainlink +0.45% to 14.17 |
| Commodities and Others |
| VIX +0.2%
to 20.55 WTI Crude +1.46% to 68.57 Brent Crude +1.34% to 72.02 Nat Gas -1.14% to 3.97 RBOB Gas +0.89% to 2.201 Heating Oil +1.17% to 2.23 Gold +0.71% to 3021.89 Silver +0.74% to 34.11 Copper +0.57% to 4.962 |
| US Treasuries |
| 1M -2.1bps
to 4.282% 3M -3.3bps to 4.2532% 6M -4.5bps to 4.2106% 12M -0.0bps to 4.101% 2Y +0.2bps to 4.0461% 5Y +0.9bps to 4.0999% 7Y +1.3bps to 4.2137% 10Y +1.7bps to 4.3158% 20Y +2.4bps to 4.6503% 30Y +2.0bps to 4.6141% |
| UST Term Structure |
| 2Y-3
M Spread narrowed 2.0bps to -27.2
bps 10Y-2 Y Spread widened 1.7bps to 26.8 bps 30Y-10 Y Spread widened 0.5bps to 29.6 bps |
| Yesterday's Recap |
| SPX +0.64%
SPX Eq Wt +1.35% NASDAQ 100 +0.55% NASDAQ Comp +0.31% Russell Midcap +1.46% R2k +1.19% R1k Value +1.3% R1k Growth +0.23% R2k Value +1.01% R2k Growth +1.35% FANG+ +0.29% Semis +1.05% Software +1.32% Biotech +1.33% Regional Banks +0.65% SPX GICS1 Sorted: REITs +1.65% Energy +1.56% Cons Staples +1.55% Indu +1.35% Fin +1.17% Materials +1.14% Healthcare +1.13% SPX +0.64% Utes +0.4% Tech +0.18% Comm Srvcs +0.11% Cons Disc -0.44% |
| USD HY OaS |
| All Sectors -4.7bp
to 356bp All Sectors ex-Energy -4.7bp to 321bp Cons Disc -3.0bp to 341bp Indu -5.6bp to 267bp Tech -5.3bp to 360bp Comm Srvcs -3.3bp to 548bp Materials -4.3bp to 315bp Energy -6.6bp to 357bp Fin Snr -5.6bp to 305bp Fin Sub -0.8bp to 227bp Cons Staples -5.3bp to 231bp Healthcare -6.7bp to 374bp Utes -7.7bp to 243bp * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 3/18 | 8:30AM | Feb Import Price m/m | 0.0 | 0.3 |
| 3/19 | 2PM | Mar 19 FOMC Decision | 4.5 | 4.5 |
| 3/19 | 4PM | Jan Net TIC Flows | n/a | 87.144 |
| 3/20 | 10AM | Feb Existing Home Sales | 3.95 | 4.08 |
| 3/20 | 10AM | Feb Existing Home Sales m/m | -3.19 | -4.9 |
| 3/24 | 9:45AM | Mar P S&P Manu PMI | n/a | 52.7 |
| 3/24 | 9:45AM | Mar P S&P Srvcs PMI | n/a | 51.0 |
