Markets were relatively quiet Friday in the absence of any economic data. A plethora of Fed speakers offered nothing new with many pondering if last week’s advance has merits. Several firms believe the averages are on the edge of a significant pullback, ahead of first quarter earnings which may prove disappointing and inflation/interest rates that are exceeding accepted levels.
There is a nascent rotation to value stocks. Is this an anomaly, which will later be viewed as nothing other than noise? The performance discrepancy between value and growth over the last decade is gargantuan, leaving value at perhaps one of the most discounted levels since Benjamin Graham wrote the Intelligence Investor.
As noted several times, passive indexing has skewed the markets. According to FINRA, approximately 55% of assets are now managed via indexing where price discovery is not a factor. Some have called today’s environment more dangerous than Communism as the big get bigger and the small get smaller regardless of underlying value or financial performance.
The last time value outperformed growth for a nominal period was 2022 but this outperformance was short lived.
What will happen tis week? Markets are closed Friday for Good Friday and trading is expected to wane as the week progresses.
The economic calendar is comprised of several manufacturing indices, revised GDP, a sentiment survey, personal spending and income data and monthly PCE statistics.
Last night the foreign markets were down. London was down 0.35%, Paris down 0.41% and Frankfurt down 0.04%. China was down 0.71%, Japan down 1.16% and Hang Seng down 0.16%.
Futures are lower ahead of possible first quarter earnings warnings and continuing reassessment of monetary policy. The 10-year is off 7/32 to yield 4.23%.
