Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
STOCK INDEX FUTURES
Stock index futures are higher.
Jobless claims in the week ended February 10 were 212,000 when 219,000 were expected.
Retail sales in January on a monthly basis were down 0.8% when a decline of 0.1% was anticipated, and excluding vehicles, fell 0.6% when up 0.2% was predicted.
The February Philadelphia Federal Reserve manufacturing index was 5.2 when -9.0 was forecast.
The February Empire State manufacturing index -2.4 when -12.5 was estimated.
Import prices in January were up 0.8% when down 0.1% was expected, and export prices increased 0.8% when down 0.2% was anticipated.
The 8:15 central time January industrial production report is predicted to show a 0.2% increase, and January capacity utilization is forecast to be 78.8%.
The 9:00 February housing market index is predicted to be 46.
The fundamentals and technicals remain supportive to stock index futures.
CURRENCY FUTURES
The U.S. dollar index is lower.
Interest rate differentials remain supportive to the greenback longer term.
The European Commission said the E.U. economy has entered 2024 on a weaker note than expected and lowered the growth outlook for 2024 by 0.4% to 0.8% in the euro area.
Housing starts in Canada declined 10.0% in January from December to 223,589 on an annual rate.
Japan’s economy fell into a recession for the first time in five years as its gross domestic product unexpectedly shrank 0.1% quarter-on-quarter in the fourth quarter of 2023, missing market forecasts of 0.3% growth and following a revised 0.8% decline in the third quarter.
INTEREST RATE MARKET FUTURES
Futures are steady at the front of the curve and higher at the long end of the curve.
Federal Reserve speakers today are Christopher Waller at 12:15 and Raphael Bostic at 6:00 PM.
Financial futures markets are predicting there is a 10.0% probability that the Federal Open Market Committee will lower its fed funds rate by 25 basis points at the March 20 meeting, and there is a 90% chance that the Fed will keep rates unchanged.
The fundamentals and technicals are not encouraging for the bullish case.
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