Stock bulls are hoping to regain control after indexes posted minor losses last week. Wall Street insiders are pointing to indications of some rotation out of big tech stocks and into other overlooked sectors.

The equal-weighted S&P 500 logged almost a +1% weekly gain while the full index lost -0.30%. A big question is whether a stronger trend develops and more money rotates away from big tech amid ongoing concerns that AI enthusiasm has gotten a bit ahead of itself.

Some tech bulls note that there has not been a lot of NEW news to boost the tech sector lately with earnings wrapped up and investors recently turning attentions back to Federal Reserve policy.

Many are looking to Nvidia’s GTC 2024 conference next week on March 18-21 to provide some fresh headlines for the bulls.

Investors this week are likely to remain Fed-focused with key February inflation data set for release, including the Consumer Price Index (CPI) on Tuesday and Producer Price Index (PPI) on Thursday. CPI in particular will draw a lot of attention after the gauge came in hotter than expected in January and prompted Wall Street to walk back rate cut expectations.

Economists expect headline inflation to remain unchanged at +3.1% but are looking for a fairly strong pullback in “core” prices to +3.7% year-over-year from +3.9% in January. It’s worth noting that the February Employment Situation on Friday did confirm suspicions that January data may have been skewed with the government revising its count to +229,000 from +353,000 previously while also slightly reducing wage gains. Data for February was mixed with job gains higher than expected at +275,000, but the unemployment rate ticked higher to 3.9% from 3.7% previously.

At the same time, wage gains pulled back to an annual rate of +4.3% from a downwardly revised +4.4% in January. Keep in mind, the "wage gain" numbers are what the Fed has been mostly concerned about as of late. Officials have said the rate needs to be running closer to +3.5% to be consistent with the Fed’s +2.0% inflation target.

Some economists believe the Fed may remain hesitant to cut interest rates as long as wage gains continue running above +4%. Most, however, believe data supports a total of three or four -25 basis point cuts beginning in June. The current outlook is in-line with the Fed’s most recent projection for three -25 point cuts this year.

Keep in mind, the Fed’s policy meeting is coming up next week (March 19-20) and will be accompanied by new economic projections. Those will include the so-called “dot plot,” which maps where Fed officials see the central bank’s benchmark rate in the near-, mid-, and long-term. These numbers have not been updated since December.

Today, there is no economic data of note but there are key earnings due from Casey’s General Stores and Oracle.

Number of Problem Banks in US Has Jumped 18% - The Federal Deposit Insurance Corporation reported last week that the number of weak US banks had risen by eight to 52 in the final three months of 2023. Delinquencies in credit card and commercial real estate loans were on the rise, the FDIC said, and were now at the highest level in almost a decade. The FDIC does not name the individual banks on the problem bank list. But the data indicated that the banks on the list were either small or mid-sized lenders. Source Financial Times

Things About to Get More Interesting for US Households:  Mortgage payments may no longer dominate the interest expense sheet, and things are about to get a lot more interesting for US households. In 2024, declining home affordability and higher interest rates have many Americans skipping home ownership to prioritize more urgent non-mortgage expenses. According to the Bureau of Economic Analysis, annual non-mortgage interest payments reached $573.4B in January — nearly reaching the $578B in annual mortgage interest paid by households as of the last quarter of 2023. At this rate, Americans could soon be paying more interest on credit, auto, and student debt than on mortgages — signaling a significant shift in household debt throughout the generations.  Source Average Joe

Unemployment Jumps to 3.9%, But is it Really a Concern?  US economy added +275,000 jobs in February according to the most recent government data. Health care led by adding +67,000 new jobs. Keep in mind, as the Baby Boomers age the healthcare sector is expected to add +2.1 million jobs through 2032, according to the Bureau of Labor Statistics, +45% of all job growth in the next decade. The government again was a big contributor, adding +52,000, while restaurants and bars added +42,000. At the same time, however, there were negative revisions to the last two months, reducing the total number of jobs added by -167,000. In return, the monthly unemployment rate for February rose to 3.9% from 3.7% back in January. It seems that more people are getting laid off or losing their job, which is pushing the unemployment higher, but we have to keep in mind we are still at historically low levels as you can see from the graphic below. 


Reddit’s Planned IPO Being Closely Followed: Reddit Inc. and its investors are seeking to raise as much as $748 million in what would be one of the biggest initial public offerings so far this year, according to people familiar with the matter. The social media platform plans a sale of 22 million shares for $31 to $34 each, said the people, who asked not to be identified because the information wasn’t public yet. The company was seeking a valuation of as much as $6.5 billion in the listing, Bloomberg News has reported. The people said the company is setting aside about 1.76 million shares in the IPO to be bought by users and moderators who created accounts before Jan. 1. Those shares won’t be subject to a lockup period, meaning the owners can sell them on the opening day of trading. The company is a high-profile addition to the year’s roster of newly and soon-to-be public companies. The biggest of those listings was the $1.57 billion offering by Amer Sports Inc. in January. Astera Labs Inc., a software maker focused on artificial intelligence, said in a filing Friday that it would seek up to $534 million in its IPO, which will likely proceed Reddit’s. Reddit’s listing will be watched closely by IPO candidates such as Microsoft Corp.-backed data security start up Rubrik Inc. and health-care payments company Waystar Technologies Inc  Source Bloomberg

Change Healthcare Outage Drags On: A cyberattack at U.S. health tech giant Change Healthcare has ground much of the U.S. healthcare system to a halt for the second week in a row. Hospitals have been unable to check insurance benefits of in-patient stays, handle the prior authorizations needed for patient procedures and surgeries, or process billing that pays for medical services. Pharmacies have struggled to determine how much to charge patients for prescriptions without access to their health insurance records, forcing some to pay for costly medications out of pocket with cash, with others unable to afford the costs. Since Change Healthcare shut down its network suddenly on February 21 in an effort to contain the digital intruders, some smaller healthcare providers and pharmacies are warning of crashing cash reserves as they struggle to pay their bills and staff without the steady flow of reimbursements from insurance giants. As the near-term impact of the ongoing outages on patients and providers becomes clearer, questions remain about the security of millions of people’s highly sensitive medical information handled by Change Healthcare. From Russia, a prolific ransomware gang taking credit for the cyberattack on Change Healthcare claimed to have stolen enormous banks containing millions of patients’ private medical data from the health tech giant’s systems. If patient data has been stolen, the ramifications for the affected patients will likely be irreversible and life-lasting. Change Healthcare has repeatedly avoided saying so far whether patient data has been compromised in the cyberattack. That has not assuaged healthcare executives who worry that the data-related fallout of the cyberattack is yet to come. Source Techcrunch

US Homes are Getting Smaller: Following a brief uptick in new home sizes in 2021, the average size of a new home continues to inch smaller — dropping from 2,479 square feet in 2022 to 2,411 square feet in 2023, the smallest average size in 13 years — to match home buyer preferences for less square footage. According to NAHB’s latest What Home Buyers Really Want study, home buyers are looking for homes around 2,070 square feet, compared to 2,260 20 years ago. “It’s related to two factors that are linked,” said Rose Quint, NAHB assistant vice president of survey research. “First, we’ve seen changes in home buyer preferences. Second, housing affordability has worsened in recent years.” This new trend is an about-face from early in the pandemic, when Americans sought out larger living spaces. Many moved into sprawling homes on the outskirts of town, sending luxury-home prices soaring. Builders for years have focused on more profitable properties, with construction concentrated in two extremes: houses on large suburban lots, or steel-and-concrete apartment buildings in urban areas, according to Robert Dietz, chief economist for the National Association of Home Builders. That has slowly begun to change, as home builders face higher borrowing costs and growing demand for more affordable options. In earnings calls, some of the country’s largest publicly traded home builders have said they are rethinking their plans so they can prioritize smaller, more affordable housing. D.R. Horton, the country’s largest home builder, sold more than 82,000 homes last year, most of them under $400,000 and to first-time buyers. Its lineup now starts at about 900 square feet. Source Washington Post


America's Great Rise! The dominant rise of US public markets over the last 120 years is difficult to comprehend until you see a comparison like this. 1899 on the left vs 2024 on the right. 


Futures trading is speculative and involves the potential loss of investment. Past results are not necessarily indicative of future results. Futures trading is not suitable for all investors.

Nell Sloane, Capital Trading Group, LLLP is not affiliated with nor do they endorse, sponsor, or recommend any product or service advertised herein, unless otherwise specifically noted.

CTG Daily Commentary is published by Capital Trading Group, LLLP and Nell Sloane is the editor of this publication. The information contained herein was taken from financial information sources deemed to be reliable and accurate at the time it was published, but changes in the marketplace may cause this information to become out dated and obsolete.

It should be noted that Capital Trading Group, LLLP nor Nell Sloane has verified the completeness of the information contained herein. Statements of opinion and recommendations, will be introduced as such, and generally reflect the judgment and opinions of Nell Sloane, these opinions may change at any time without written notice, and Capital Trading Group, LLLP assumes no duty or responsibility to update you regarding any changes. Market opinions contained herein are intended as general observations and are not intended as specific investment advice.

Any references to products offered by Capital Trading Group, LLLP are not a solicitation for any investment. Readers are urged to contact your account representative for more information about the unique risks associated with futures trading and we encourage you to review all disclosures before making any decision to invest. This electronic newsletter does not constitute an offer of sales of any securities. Nell Sloane, Capital Trading Group, LLP and their officers, directors, and/or employees may or may not have investments in markets or programs mentioned herein.