MARKET WRAP

The day started poorly for equities, rebounded somewhat midday, and had a decent close into the weekend. For the day, SPX +0.1%, QQQ +0.4%, and IWM -0.6%. As we’ve been mentioning all week, today’s expiry was a big one and kept SPX within a tight range all week. Of significance, the SPX was +0.5% on the week, ending a string of four straight weeks of losses. Earnings took NKE, MU and FDX all lower today. Some recently beaten up stocks like PLTR and TSLA headlined the gainers.

It was a quiet day for Treasury yields, with the 10-year yield still near 4.25. Gold saw a slight pullback from highs, oil edged higher this week and is now 68.20. The VIX closed near 19 into the weekend.

• On today’s RiskReversal Pod: Tariffs, fiscal policy, the consumer, corporate CapEx, recession and stagflation risks and more with David Rosenberg of Rosenberg Research.

MRKT MATRIX: March 21, 2024

Today’s Top Stories:

• Jerome Powell Says Trump Can’t Fire Him. That Might Change (Bloomberg)

• Where Are Analysts Most Optimistic on Ratings for S&P 500 Companies Heading into Q2? (FactSet)

• Tom Lee says the market ultimately will rebound from the tariff scare, as in 2018 (CNBC)

• BofA Says Tariff Risk Dismissed as Stocks Get ‘Monster’ Inflows (Bloomberg)

• Money-Losing Retail Crowd Keeps Buying Stocks as Market Teeters (Bloomberg)

• Musk Set to Receive Top-Secret Briefing on U.S. War Plans for China (WSJ)

• Germany Set for Trillion-Euro Defense and Infrastructure Splurge (WSJ)

• London Heathrow Shut After Fire in Worst Disruption in Years (Bloomberg)

• JPMorgan upgrades Super Micro to hold rating on Nvidia Blackwell chip ramp (CNBC)

• Nike Comeback Bid is Threatened by Inventory Reset, Tariffs (Bloomberg)

• FedEx Falls After Outlook Cut Again Amid Economic Worries (Bloomberg)

Today’s RiskReversal Podcast is Presented by CME Group, iConnections, and Robinhood

Market Uncertainty, Trade Wars and Stagflation Risks with David Rosenberg

Guy Adami and Dan Nathan are joined by David Rosenberg, founder of Rosenberg Research, to discuss notable economic developments and their implications. The episode covers the Federal Reserve's recent stance on monetary policy, adjustments in GDP and inflation forecasts, and the potential onset of stagflation. Rosenberg elaborates on the impact of tariffs, fiscal policies, and the prolonged economic uncertainty on consumer behavior and corporate CapEx. He also highlights historical parallels and the prospects of a recession, while offering his perspective on inflation trends and the equity market's current outlook.

Timecodes

• 0:00 - Fed & Stagflation

• 14:20 - Commodity Outlook

• 18:00 - Trump's Influence

• 24:20 - Growth Outlook (Ad)

• 31:40 - Historic Parallels & CapEx

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What’s Next?

Today's expiration Friday mirrored the broader trend of the week, with range bound trading between 5600-5700 SPX. Today’s example saw selling down to the 5600 level and a bounce to close barely in the green. The recent range-bound action has been largely driven by two key factors: the disproportionate impact of expiring option positions and a lack of significant headlines on the tariff front.

While today’s expiration clears some of those short-term market dynamics, traders aren’t pricing a ton of volatility to start next week. Recent Mondays have been notably volatile, so if weekend news once again causes a large Monday gap, traders may find themselves a little flat footed after this week’s sideways action.

Where volatility expectations are shifting, however, is the week of March 31st. That’s in anticipation of a few known events tied to upcoming tariff deadlines (April 2nd) and crucial economic data, including the NFP jobs report later that week.

For instance, SPX options currently have an implied volatility (IV) of around 16 for next week but it rises to 19 IV for the week of March 31st. Do traders have it correct and we’re simply in a calm between two tariff storms? Or did a pinned expiration week lull us all into a false sense of security?

We’ll be back this weekend to talk more about the new market dynamics and a preview of next week’s catalysts. Check your inbox Sunday evening!

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