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Market Headlines 👀 

• Apple (AAPL) in talks with Google to license Gemini to power its AI features.

• Nvidia (NVDA) company set to discuss new B100 chips and various product announcements at its GTC conference starting today.

• Alphabet (GOOGL) shares up 7% following news with Apple AI partnership.

• Goldman Sachs (GS) only sees three rate cuts this year instead of four.

• Reddit (RDDT) IPO is set for Thursday, company is aiming for a $6.4b valuation and shares could be priced between $31-34.

• National Realtors Association announced a landmark deal in a major lawsuit which could result in eliminating real estate agent fees when selling a home.

• Nasdaq sees a major technical glitch before market open today which affected trading for 2 hours pre-market.

Earnings 💸

• D-local (DLO)

  • EPS: $0.10 misses (exp. $0.15)

  • Revenue: $188m beats (exp. $173.85m)

S&P 500 Heatmap 🔥 

Recap Around the Street 🧠

This stickiness in inflation is causing the bond market and Fed’s desired turbulence-free descent in inflation to hit some bumpy air. The end result is an unwind of pricing of Fed rate cuts and a rise in yields.

Here you can see the Fed Funds Futures pricing (using Bloomberg’s World Interest Rate Probabilities) for the number of rate cuts expected by December of this year. This pricing has gone from an ultra-dovish 6.5 cuts in mid-January to just 3 cuts today. 

We think this pricing for the number of cuts is far more reasonable, but still could face challenges if inflation data continues to come in hot. 

Further, we think Jim Bianco’s recent argument that the Fed has a narrow window to begin cutting is important. Jim argues that if the Fed does not cut by May or June, they will have missed their window to alter policy before acting too close to the 2024 election (with July, September and November potentially off the table given election events timing). 

This could mean that if the Fed does not cut by May or June and data does not give the Fed a good reason to cut (such as a string of soft jobs data that suggests a sharp weakening in the economic environment), the Fed may not have the degrees of freedom to deliver on the three cuts it showed in its December Dot Plot.

To the point of the Dot Plot and the Summary Economic Projections, next week the Fed will provide an update to these forecasts.

It may be too early for the Fed to shift its forecasts too much, but we would not be surprised to see a higher forecast for 2024 GDP and possibly a slight shift higher in the median dot for 2024 rates. On the GDP front, in December the Fed forecasted 1.4% for 2024, which at the time aligned with consensus forecasts as well. However, since December, 2024 GDP forecasts have been revised up materially to 2.1%, as seen below.

(Contributed by Cameron Dawson, CIO at NewEdge Wealth).

Market Preview 🎞️

• Tuesday, March 19th: Building permits; housing starts

• Wednesday, March 20th: MBA mortgage applications; US Federal Reserve FOMC meeting and Powell press conference

• Thursday, March 21st: Weekly jobless claims; S&P global manufacturing PMI; Existing home sales

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That’s all for today, folks! We’ll be back around the same time Thursday with a curated list of important news, economic data and market highlights. 

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