Macrosynthesis

That's a Wrap

US stocks closed mixed on the final trading day of Q1. The S&P 500 reached a new high, while the Dow Jones rose by 47 points. Conversely, the Nasdaq ended slightly lower. Investor focus shifted towards the impending release of the Fed's inflation measure and Chair Jerome Powell's comments. Despite a weak start, stocks are expected to end the quarter strongly, bolstered by a $4 trillion increase in US equity values. Throughout the quarter, the S&P 500 gained 10.2%, marking its most substantial first-quarter increase since 2019, with the Dow Jones rising by 5.6%, its strongest first-quarter performance since 2021, and the Nasdaq climbing 8.6%. Utilities (XLU) and energy (XLE) were the top performing sectors last week, while real estate stocks were the worst group. Across industries, gold miners (GDX) and materials stocks (XME) outperformed all others last week. Solar stocks (TAN) also staged a bit of a comeback last week.

The upcoming week in the US will be busy, with a focus on the labor market report, including non-farm payrolls and the unemployment rate. Other significant data to monitor include JOLTS job openings, ISM Manufacturing and Services PMI and factory orders.

PCE Ticks Higher

The US Personal Consumption Expenditure Price Index rose 0.3% in February 2024, below forecasts and January's 0.4%. Services and goods prices increased by 0.3% and 0.5% respectively. Annual rate edged to 2.5%. Core PCE inflation slowed to 0.3%. Food prices rose 0.1%, energy prices surged 2.3%. Core inflation rate slowed to 2.8%, the lowest in about three years, from 2.9%.

Powell Speaks

Federal Reserve Chair Jerome Powell stated Friday that strong economic growth provides flexibility for the central bank to be patient with interest rate cuts. Despite earlier hopes for substantial cuts, officials are cautious, prioritizing confidence in controlling inflation. Powell emphasized the Fed's independence from political influence.

And Consumer Spending Still Kicks

In February 2024, US personal spending surged by 0.8%, the largest since January 2023, surpassing January 2024's 0.2% and expectations of 0.5%. The rise, amounting to $111.8 billion, was primarily driven by increased spending on services and goods, notably financial services, transportation, and housing. Adjusted for inflation, consumer spending grew by 0.4%.

Gold's Golden Days

Gold hit $2,230 an ounce on Friday, hitting all-time highs amidst expectations of central bank rate cuts and geopolitical tensions. The metal is poised to advance over 9% in March. This follows the US Federal Reserve maintaining its outlook for three rate cuts despite high inflation. Other central banks, like the Swiss National Bank, are also cutting rates. Investors are hedging against geopolitical instability with gold amid ongoing uncertainties in Eastern Europe and the Middle East.

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Commodity Movers

Crude Oil

+3.09% (1W Chg)

+5.10% (1M Chg)

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Natural Gas

-3.32% (1W Chg)

-11.30% (1M Chg)

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Gold

+1.75% (1D Chg)

+9.26% (1M Chg)

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Cocoa

+14.10% (1W Chg)

+51.04% (1M Chg)

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Noteworthy Events  

The House Always Wins

On March 28th, Luxury home furnishing retailer RH's stock soared 17.26% on strong forecasts, despite lower Q4 earnings. RH is up nearly +43% within the last year.

r/Pump&Dump

March 28th, Reddit's shares fell 14.6% after CEO Steve Huffman and COO Jennifer Wong sold 500,000 and 514,000 shares respectively. The stock surged 92% since its NYSE debut on March 25.

GameStopped

GameStop's stock dropped by 15% on March 27th following its report of lower fourth-quarter revenue as well as an announcement of job cuts as part of its cost-cutting measures.

Kreme + Micky D's

‍Krispy Kreme surged 39% on the 26th, marking its best day ever. This followed McDonald's announced plans to sell Krispy Kreme doughnuts at its nationwide restaurants by the end of 2026, starting the rollout later this year.

Truth Wins

Digital World Acquisition Corp. ($DWAC now $DJT) surged 35% on the 25th following shareholder approval for its merger with Trump Media & Technology Group. The merger allowed Trump's social media platform, Truth Social, to commence trading the following day. $DJT surged this week, peaking at nearly +100% -- closing +60% on Thursday. $DJT has nearly an $8.4 billion market cap while only reporting an operating loss of $10.6 million for the first nine months of 2023 on revenue of just $3.4 million.

Boeing's Continued Turbulence

Boeing's stock rose by 1.3% on the 26th following the announcement that CEO David Calhoun would retire by the end of 2024. Additionally, the company stated that board chairman Larry Kellner would also step down. $BA is down nearly 23.3% YTD.

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CASE STUDY: Don't Trust Overnight Action

Celsius (CELH) - a favorite stock of LevelFields, recently saw a massive selloff in the overnight hours following its earnings announcement on March 1st, 2024.  Why? There really wasn't a good reason. The stock had rallied for years and they have been growing revenues quickly. Often times, jittery investors and traders just can't wait to hit the sell button and the low volumes can make it seem like there's a bad selloff happening.

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The stock dropped -14% in the after hours, then went on to rise +38% over the next week as more sophisticated investors took advantage of the price drop.

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What's the lesson here? You cannot trust the overnight markets to properly price an equity.  It requires more market participants, high volume, and institutional investors that deploy a lot more capital per trade to price a stock.

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Our Level 2 members were alerted to Celsius' progress and made 50% in just one week from option trades on the stock. We don't listen to the overnight action - we do our own price analyses.

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Upcoming Catalysts:

EARNINGS

Tuesday

• Paychex (PAYX)
• Dave & Busters (PLAY)

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Wednesday

• Acuity Brands (AYI)
• Levi Strauss (LEVI)

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Thursday

• Lamb Weston (LW)
• Lindsay (LNN)
• Simply Good Foods (SMPL)

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The LevelFields Team