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Weekly Economic and Stock Market Commentary – March 20, 2023


Weekly Economic and Stock Market Commentary – March 20, 2023

March 21

As for the stock market specifically:

As one who is not afraid of a cheap and easy turn of a phrase, dare I say it must have been the Irish luck that brought stock market gains for three of the four market indices I track in the opening table. Despite the bank failures last week, the losses seemed to limit themselves to bank stocks, both large and small. The technology-laden Nasdaq Composite had a strong week and pulled the S & P 500 with it. There was volatility in both directions, which always makes things interesting. As wild as Friday’s trade was, please don’t forget, it was options expiration and that very often brings its fair share of volatility.

Is everyone sitting down? This past weekend, the trade association for small and mid-sized banks called on the federal regulators to guarantee all deposits, even those in excess of the current $250,000 for a period of at least two years.

Right now the sum of bank deposits in the US is about $19 trillion dollars. In other words, if all the banks failed simultaneously, the US government (us) would be on the hook for $19 trillion dollars.

Reality informs us that every bank failing at the same time is highly unlikely, and I think there would be other disasters occurring too.

That said, the trade group is calling for the effective transfer of risk from management to the taxpayer. Or as is commonly referred to as: “privatize profits and socialize losses”. With tongue firmly planted in cheek: what can possible go wrong?

Even though market averages went up last week, the bullish percent risk indicators declined. The bullish percent on the Nasdaq fell below the 30 yard line All fell at least 5 percentage points for the week. We start the week off in WEALTH PRESERVATION mode across the board.

Remember, X’s mean OFFENSE or wealth accumulation, while O’s mean DEFENSE, or wealth preservation.

Below is where our indicators stand as of March 17, 2023 (Courtesy Dorsey, Wright, and Associates).

On a general note:

I said so much last week, how about we just leave it here for this week.

If you have any questions about this March 20 commentary, or your portfolio, please feel free to call me.