• Current read is 43 on the fear greed index vs 43 last week.

• I put this closer to 55. The market at basically at ATHs with elevated valuations.

• Market Fearful = Potential Opportunity/Deals. (consider buy calls/sell puts/buy shares)

• Market Greedy = Potential Over Valuation. (consider buy puts/sell shares/take on less risk)

• I like to be bullish when there is extreme fear

• I like to be bearish when extreme greed.

• Opportunity is out there, just gotta find it!

• 30 year fixed mortgage rate flat at 5.71% Today, vs 5.98% last week.

• 10 year treasury bond yield fell to 3.97% Today, vs 4.09% last week

• 2 year treasury bond yield fell to 3.40% Today, vs 3.48% last week.

• Bond yields decreased a little bit this week on the back of a flight to safety with market volatility & some money rotating out of tech.

• As I always say, interest rates are gravity!

• As interest rates/bond yields DECREASE, stocks become MORE attractive because bond yields go DOWN which makes the risk free bond look LESS attractive.

Let’s Break It Down:

Upcoming Week Market Outlook | Week of Monday, March 2nd

Overall Market Thoughts

This past week we saw continued volatility in the high beta, high volatility names as Mr. Market is still confused on how to price things.

This will likely continue because of the Iran situation. But! Will this really impact the true fundamental value of our companies? 99.9%… NO! Keep emotions in check. Filter out the noise vs the signal.

Several big tech names like Nvidia and Robinhood had swings of 5%, or more at some point during the week. Nvidia is down almost 7% after releasing super solid earnings. The true value of these businesses is not changing by that much day to day. That is volatility. And volatility creates opportunity. Nvidia is actually becoming double cheaper cause of raising EPS and of course share price falling. That = potential opportunity if you have a longer term horizon.

Right now I feel like the S&P 500 and Nasdaq are roughly 10% overvalued. But while price is trading sideways or slightly down, earnings per share continues to grow in the background. That means the market is naturally getting cheaper day by day.

These tiny dips in the SP/Nasdaq is day to day volatility and is justified. We just came off back to back 20% years. Earnings growth did not justify that level of expansion. So valuations are stretched. A pullback is normal and healthy.

On the labor side, initial jobless claims came in below expectations. There were fewer people that filed for unemployment than expected. This means we are not seeing a major spike in layoffs and the labor market remains stable. Good!

Consumer Confidence came in at 91.2 (forecast was 87.4, previous was 89.0). This is a soft data survey that measures how optimistic consumers feel about the economy, their jobs, and their financial situation, so it’s mainly opinion.

If people feel good, they spend. And consumer spending makes up roughly 70% of US GDP. So this does matter. But remember this does not measure consumer spending. That is the hard data that I put more weight on. This only measures sentiment.

On inflation, the PPI report came in at +2.9% YoY, above the +2.6% estimate.
It’s slightly down from +3.0% last month. So there is improvement but less than expected.

PPI is how much producers (the manufacturers of goods pay to produce things, this could be a leading indicator to consumer price index because they have to produce it before we consume it. The move was driven mostly by services inflation, up +0.7% MoM

So this is kind of a double edge sword. The fact that services inflation is higher means the services sector has demand and pricing power.

It does point to that sector being healthy which is a large chunk of the U.S. economy. But of course the flip side is the market may view this as interest rates higher for longer since the economy is fine and inflation is a tad elevated.

With time inflation will likely continue to fall. I am confident in that thesis. But it will be bumpy! Be patient!

Overall I expect continued volatility. But nothing changes about the strategy. We buy great companies at good prices with a moat, pricing power, and durable competitive advantage. We only use stock options to magnify ultra high conviction setups.

Keep your ratios in check and you never lose sleep. We are investors. Not speculators who only make money if everything goes straight up. We can operate in bull markets and bear markets & continue to beat the market in the long run by sticking to the plan that has worked for the last 10 years ish.

Monday March 2

The first thing will be to see how the market reacts to the Iran situation. Oil prices will likely be volatile, along with defense stocks. My thesis is that WW3 is not here. But this will likely cause some volatility. As I say a million times, volatility will always come so it should never catch us off guard. My portfolio is always allocated to win on upside & downside. Filter out the signal vs noise. Ok, now in to the data below!

We get the final S&P Global U.S. Manufacturing PMI report. This is a monthly "health checkup" for American factories that tells us if the sector is growing or shrinking. It uses a 0 to 100 scale where anything over 50 means expansion and anything under 50 means things are cooling off. Because it tracks real time data it’s a good indicator for where the broader economy is headed before the official GDP numbers come out.

We also get the ISM Manufacturing Report. as the "vibes check" for American factories, based on a survey of purchasing managers who are right in the thick of supply chains and production. It uses a 0 to 100 scale where anything over 50 means the sector is growing and anything under means it’s shrinking. It also tracks real-time data, so it’s one of the first big clues investors get each month about whether the broader economy is good or potentially slowing down.

As for earnings, we get Big Bear Ai & Archer Aviation.
Not super needle movers here IMO.
(deep dives will be in discord as always)

Tuesday March 3

Various Fed presidents speak

As for earnings, we get Target, BestBuy, Crowdstrike, , & GitLab.
The important ones will be TGT and BBY to get a gauge of consumer spending.
The rest matter less but I will still cover.
(deep dives will be in discord)

Wednesday March 4

We get the ADP National Employment Report. This is basically a sneak peek at the U.S. job market, focusing entirely on private sector payrolls before the government drops its official "big" jobs report on Friday. It’s a good gauge to see which industries are decent and if any are slowing down.

We also get the ISM Services Report which is a broader version of the manufacturing report. It covers the part the U.S. economy that isn't about making physical stuff. It uses the same 0 to 100 scale where a reading above 50 means the services world is good and expanding, anything below indicates a slowdown. Since services make up roughly 90% of the U.S. economy, this report is a huge deal for seeing if consumers are still out there spending money or if things are starting to get soft.

The Fed’s Beige Book also comes out. This is the Federal Reserve’s reports from business owners, community leaders, and economists across all 12 Fed districts. The other reports are just numbers and the Beige Book is giving you the "why" behind the numbers. It’s the Fed’s favorite way to check if the economy feels as good (or as bad) as the official statistics say it is before they meet to decide on interest rates.

As for earnings, we get Wix, Abercrombie, Broadcom, and WeBull
(deep dives will be in discord)
The big one here is Broadcom. This gives us an idea of how AI/semiconductor demand & profit margins are holding up. I think they will report good, but it’s all about the guide.
(deep dives will be in discord)

Thursday March 5

Initial and continued jobless claims come out. This is important.

Initial claims show how many people are newly filing for unemployment. Continued claims show how long people are staying unemployed. That gives us a real time gauge of labor market strength or weakness. One of the major threats right now to this bull market is the labor market, it’s important to watch this closely.

We get the U.S. Productivity report. This is the economy’s "efficiency scorecard," measuring how much "stuff" (output) we're producing for every hour worked. Think of it as a way to see if we’re working smarter or just working longer; when productivity goes up, it means companies are using new tech or better processes to get more done without needing to hire. This is a huge deal because high productivity is the "secret sauce" that allows wages to rise and the economy to grow without sending inflation higher.

We also get the Import Price Index that tracks how the costs of imports into the U.S. changes over time. It’s a big piece of the inflation puzzle because when it costs more to import things, those higher prices can eventually trickle down to the consumer.

As for earnings, we get JD.com, Kroger, Costco, and Marvell
Marvell is the big dog and will give us clues about custom AI chip AI demand and if their deals with Amazon, Microsoft, & others are scaling.
(deep dives will be in discord)

Friday March 6

We get the U.S. Employment Report. The big dog that shows us how many jobs were added in February and where the current unemployment rate stands.

Cleveland Fed President Beth Hammack speaks

No companies report earnings

Final Thoughts

I am not worried about the Iran situation or oil prices. This will likely not cause a lasting inflationary effect and move interest rates in the long run. Give this time to play out. Be patient & keep emotions in check!

We are wrapping up Q4 earnings season, and I will be breaking everything down in real time inside Discord, continuing to look for opportunities while keeping risk and ratios in check.

Given current valuation levels, I expect volatility to remain elevated, but investors with a longer term time horizon should still do very well.

This is exactly why I focus on long dated option contracts, buying calls and selling portfolio secured puts, not cash secured puts. Keep ratios & emotions in check!

I will see you all next week!

As always, I am rooting for you and want nothing but wealth & health for you & your family!

-Brandon

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