More Flip Flopping and a Change in our Portfolios

In the continuing saga that no one can understand let alone keep track of, the administration has again delayed the imposition of some tariffs against some of our trading partners. The market which hates uncertainty is demonstrating its dislike of said chaos and what might some call the ineptitude of the administration's economic “plan.” On Sunday, the President admitted that the economy was undergoing “a period of transition.”

Amongst all the sectors, it seems that tech and communication services investors have been the least willing to see how all this self-imposed turmoil turns out. They have been in the “sell now, ask question later” camp. As such, the Nasdaq, as of Friday’s close at 18,196, is a mere 12 points from correction territory which is defined by a -10% drop from the previous high, which was set on December 16, 2024, at 20,204.58.

The Atlanta Fed GDP Now tool, which shocked the markets last Friday with an initial reading of -1.5% Q1 GDP growth, took another leg down this Friday and registered a -2.4% Q1 number. Net exports are the driving factor in this equation as U.S. business have been trying to order and pay for international goods prior to the implementation of the tariffs. It is possible that once U.S. inventories are accounted for the GDP Now number will normalize but as of right now it looks extremely worrisome.

As a result of the issues this publication noted last week, the above-mentioned data points, and the ongoing political and economic uncertainty, we have decided to make a rare mid-cycle rebalance to our portfolios.Equities will be reduced from overweight to equal weight vs our benchmark, our dedicated technology allocation will be eliminated, we will add to our quality and factors allocations and will decrease our underweight to developed international. Our fixed income allocation will remain unchanged.

The UpcomingWeek:Mar 10– Mar 14

Earnings season has just about concluded but there are a few laggards to keep an eye on this week including Kohl’s (KSS), Oracle (ORCL), and Adobe (ADBE). February inflation data starts to trickle in withretail (Consumer Price Index, CPI) and wholesale prices paid (Producer Price Index, PPI). The January Job Openings and Labor Turnover Survey (JOLTS) will also be released.

Economic Calendar

If you know of any friends or family members who could benefit from our services and these types of communiques, we are accepting new clients and offer a complimentary one-hour review.

Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets...Bitcoin, Ethereum, Solana, ACHR, BITB, NVDA, and RIVN.