It’s still all about trade but there are a few other things to watch this week.
Wednesday: Retail sales (+1.4% expected)
It’s been a tough year for consumer spending but especially retail sales. January declined -1.2% (its worse month in almost 4 years), while February only rose +0.2%.
The estimates for March is for a gain of 1.4%, but I’d be surprised if results don’t come in below that estimate.
Regular readers know I’ve been focusing on the real retail sales (retail sales minus inflation). It’s gone no where in 4 years, signaling that all the gains have come from rising prices only, not an increase in demand.
Earnings: 33 S&P 500 companies will report quarterly earnings this week. Notables include Citigroup Inc (NYSE:C) on Tuesday, and Netflix (NASDAQ:NFLX) on Friday.
Only about 6% of companies have reported Q1 results so far, but the estimates are for the biggest sequential decline (-7.8%) since the COVID shutdown of Q1 & Q2 2020.
Although year-over-year EPS growth is projected to remain positive, around 5.9%.
Last week, the S&P 500 neared bear market territory by falling 20% from its all time high. The 2023 bear market stopped at the midpoint of the prior bull market. And so far the midpoint of this latest bull market has stopped the selling.
Whether the lows are in or not is anyone’s guess at this point. I still have my doubts. Unfortunately we are dealing with forces that are completely out of our control (not that there is ever anything we can control), and almost impossible to predict: #1) the outcome & #2) how the markets will react to that outcome.
If last weeks volatility made you panic. You aren’t alone. We all have done that at some point in our investing career. Its OK to make tactical adjustments, but thinking you can time the market by going “all in” or “all out” will most likely do more harm than good.
Successful investing isn’t so much about what you own, but more about what you do. In other words, how do you react when things get bad, and even when things get really good.
If you sold out and now wish you hadn’t but don’t want to chase prices higher, than one thing you can do is “layer in” or buy in increments. You can also focus on higher quality if that keep from losing sleep at night. The above chart shows % of revenues from foreign sales by sector. You can focus on the sectors like Utilities, Financials, Health Care that have the least amount of foreign sales that could potentially be less volatile in the tariff drama.
It’s no surprise that many of the sectors that are least exposed to foreign sales are the areas of the market that being hit the least.
But there is no substitute for a broadly diversified portfolio. US stocks are down double digits this year while the total international stock index is still positive (+2%).
You can also focus on high quality with SPHQ and VIG if that helps you get back into the market with less stress. None of this guarantees a positive outcome in the short run, but it keeps you in the market, then its probably worth it.