March Madness in the Markets

Week of March 17th Weekly Market Update

With the exception of last year’s steady rise, March has been maddening for investors. In three of the past four years the S&P 500 raced higher in March only to reverse all of those gains in a pullback of about 10% that began in late March or April. It later took stocks at least five months to climb back to the peaks of March.

As the NCAA tournament gets down to its own sweet sixteen while the rest of March plays out, it is a good time to reflect on the competing drivers of the markets that may make for an exciting showdown in the weeks and months to come.

 As we narrow down stocks’ “sweet sixteen” potential drivers again this year, the four “regions” of market-moving factors vying for investor attention are: economy, policy, fundamentals, and sentiment.


  • Employment vs. Weather

– Job growth and other indicators of economic growth slowed in recent months. We will learn in the coming weeks how much of that      reflected a genuine softening of economic activity versus just the impact of extreme winter weather across the United States in the form of snowfall and low temperatures.

  • China vs. Germany/Japan

– What is the trajectory of global growth? The second largest economy in the world, China, appears to be slowing. However, the third and fourth largest economies, Germany and Japan — which when combined are similar in size to China — have shown signs of accelerating growth. In the short term, Japan faces a fiscal drag due to a tax increase, but tremendous monetary stimulus should help to sustain growth over the remainder of the year.


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