OK folks, that’s it for me today. I’ve got the Pro Portfolio Weekly Roundup to finish. 

Be sure to check back tomorrow for our Portfolio Signals post and if you haven’t joined us yet, we’d love to see you at next week’s Portfolio Office Hours on Wednesday.

Have a wonderful weekend, and I’ll see you before too long!

The last few weeks have brought ample warnings about consumer spending prospects with retail-facing companies delivering weaker-than-expected guidance, more often than not.

Digging into things a bit we find two dueling views on when we could see the real softening emerge:

EMarketer’s Sky Canaves says retailers had already pulled ahead orders in the later part of 2024 or the start of this year, evidenced by a 13.4% increase in import cargo levels in January, according to the National Retail Federation. She expects that to cool off.

The view from Scott Benedict of Benedict Enterprises, a retail consultant and former buyer for Walmart and other retailers, is retailers have largely already ordered spring and summer apparel, sports equipment, and home furnishings, but they may cut orders for summer- and fall-related merchandise dramatically.

I noticed yesterday Jason Meshnick shared a podcast with the Diary, and I’m going to do the same by recommending the Acquired podcast. If you haven’t heard of it you are in for a treat with these very long-form deep dives. Over the last year, they’ve shared their in-depth looks at the history and key inflection points for Microsoft MSFT, Meta META, Starbucks SBUX, Ikea, Mars, Taiwan Semiconductor TSM.

Their latest is a five-hour discussion on all things Rolex. Listen to it now, bookmark it for later — either way I suspect you’ll be thanking me for sharing.

As I look out over the economic and earnings calendar for next week, the biggest data point will likely be Monday’s Flash March PMI data from S&P Global. It’s the first hard look at the economy during the month, and what it says about inflation as well as job creation and new order demand will tell us quite a bit about the vector and velocity of the economy.

Despite President Trump saying today there will be some flexibility with his April 2 reciprocal tariff plan, the other thing I’ll be watching for next week is corporate pre-announcements. As companies start rolling up their books, given what we’ve seen with the consumer and the high degree of business uncertainty found in the most recent NFIB Small Business Optimism Index, I suspect companies will take this opportunity to reset their guidance. Remember that in addition to Trump’s retaliatory tariffs, the European Union is set to deliver tariffs on U.S. goods in April.

A wrinkle that maybe we should have seen coming?

In an interview published today, the U.S. Federal Communications Commission Chairman said he is prepared to block mergers and acquisition proposals from companies that promote “invidious” DEI policies.

“If there’s businesses out there that are still promoting invidious forms of DEI discrimination, I really don’t see a path forward where the FCC could reach the conclusion that approving the transaction is going to be in the public interest.”

I tend to channel surf across the Sunday morning talk shows, enjoying probably more coffee than I should, paying more attention depending on who is saying what. With that in mind, here’s the line-up so far for this Sunday’s talk show circuit:

ABC “This Week”: Sen. Bernie Sanders (I-Vt.).

CBS “Face the Nation”: Sen. Rand Paul (R-Ky.) … Scott Gottlieb.

CNN “State of the Union”: Education Secretary Linda McMahon … Rep. Ro Khanna (D-Calif.). Panel: Chris Sununu, Rep. Jason Crow (D-Colo.), Shermichael Singleton and Xochitl Hinojosa.

FOX “Fox News Sunday”: Maryland Gov. Wes Moore. Panel: Michael Allen, Francesca Chambers, Penny Nance and Juan Williams. Legal panel: Ilya Shapiro and Tom Dupree. Sunday special: Clint Romesha.

MSNBC “Inside with Jen Psaki”: Rep. Greg Casar (D-Texas) … Annie Karni … Luke Broadwater.

NBC “Meet the Press”: Senate Minority Leader Chuck Schumer … Sen. John Curtis (R-Utah). Panel: Yamiche Alcindor, Adrienne Elrod, Stephen Hayes and Hallie Jackson.

NewsNation “The Hill Sunday”: Kentucky Lt. Gov. Jacqueline Coleman … Robert George. Panel: George Will, Tamara Keith, Tara Palmeri and Jessica Taylor.

Who doesn’t love a good dividend or one that is growing?

Here are some companies that have announced a dividend increase in the past week:

Qualcomm QCOM

Dividend declared: March 18

New dividend amount: $0.89

Previous amount: $0.85

Increase: 4.7%

JPMorgan Chase JPM

Dividend declared: March 18

New dividend amount: $1.40

Previous amount: $1.25

Increase: 0.2%

Williams-Sonoma WSM

Dividend declared: March 19

New dividend amount: $0.66

Previous amount: $0.57

Increase: 15.8%

Here are some companies that have announced a dividend in the past week:

WD-40 WDFC

Dividend declared: March 18

Dividend amount: $0.94

Scholastic SCHL

Dividend declared: March 19

Dividend amount: $0.20

First Energy FE

Dividend declared: March 19

Dividend amount: $0.445

Winnebago WGO

Dividend declared: March 19

Dividend amount: $0.34

Here are some companies that have an ex-dividend date coming next week:

Best Buy BBY

Ex-dividend date: March 25

Payout date: April 15

Humana HUM

Ex-dividend date: March 28

Payout date: April 25

Keurig Dr Pepper KDP

Ex-dividend date: March 28

Payout date: April 11

Ralph Lauren RL

Ex-dividend date: March 28

Payout date: April 11

There’s a lot of talk about AI and AI adoption, and I found the following comments from JPMorgan JPM CEO Jamie Dimon particularly interesting:

https://www.youtube.com/watch?v=eA-1RFov-tY

While I continue to peruse those articles mentioned in my last post, here are some comments from Bob Lang on the yield curve:

There is always lots of chatter in the financial media about the yield curve and what it is supposed to mean. For our purposes, we look at the 2/10 spread to interpret how the economy looks going forward. Think of it an economic expectation adjusted for inflation. This is an important consideration as it directly affects business outlook, confidence and eventually earnings.

But why the 2/10, when other yields could be examined? The 10-year is a nice proxy for mortgage rates and consumer confidence. The 2-year is a nice proxy to determine fed funds outlook, inflation and short-term confidence. Together, the yields are netted and result in a spread that captures the elements of the economy short, intermediate and long term. Mortgages are important as your house is probably the most valuable asset you own; the 10 yr is a good yield to track as most homeowners stay in a house an average of 10 yrs.

The curve can imply strength or weakness in the economy; often an inversion of the curve (10 above the 2) implies a recession could be around the corner, so this is used as a "heads up."

How do we interpret the spread of the 2/10? When the spread is positive it means the 10 yr is above the 2 yr, which implies decent growth with low inflation. An inverted curve implies the opposite may be occurring.

The chart currently of the 2/10 spread is positive and has been since early December. It rose up smartly that month and into early 2025 but has now settled between .18 to .33. If the spread starts to fall below zero the Fed may have to consider rate cuts as the economy would be showing some weakness, especially if the 10 yr drops sharply vs the 2 yr. If the 2 yr stays where it is and this develops, we could be looking at a stagflation situation (higher inflation, slower/sluggish growth).

Something to watch for on a regular basis.

Here are some of the articles that have caught my attention and that I intend to read as I refuel for the second part of the trading day.

Small Business Administration Planning to Cut More Than 40% of Its Workforce

Heathrow airport says it does not know when it will be able to reopen

East Asia’s armsmakers are on the rise

How TD Became America’s Most Convenient Bank for Money Launderers

The Three Witches Return to the Markets

And here’s a sneak peak at tomorrow’s Portfolio Signals, a Saturday piece that shares confirmation points ripped from the headlines for the Pro Portfolio’s investment strategies and holdings:

“AI is no longer just a tool for innovation, it’s a weapon,” says Setareh. “Hackers now use generative AI to craft hyper-targeted phishing campaigns, spread disinformation, and even automate attacks on telecom networks.” Recent incidents, like a 300 Gbps DDoS assault that temporarily crippled a GCC country’s connectivity services, underscore the scale of the challenge. “We once thought 20 Gbps defences were sufficient. Now, attackers deploy 15 times that volume,” he adds. Read more here

All I told I count 24 other signals we’ll be sharing tomorrow. Be sure to check your emails or visit the Pro Portfolio page.

Back in a bit!

Donald Trump announced on Friday that Boeing BA had been awarded a contract to build the U.S. Air Force's most sophisticated fighter jet, known as Next Generation Air Dominance.

I know Sarge likes his baseball trivia and Doug has shared stories from his time as a jockey, but with the Boston Celtics coming under new ownership, we are looking at one of the highest sale prices for a U.S. sports team. In history.

Currently owned by Boston Basketball Partners, which is led by the Grousbeck family, the Celtics are being sold to a group of investors led by Bill Chisholm, co-founder and chief investment officer of Symphony Technology Group, at a valuation of $6.1 billion.

That’s a wee bit higher than the $6.05 billion price a group led by Josh Harris paid to buy the NFL's Washington Commanders in 2023. It’s also easily greater than the prior record for the control stake of an NBA team, which was set two years ago when Mat Ishbia bought the Phoenix Suns for $4 billion.

I have to wonder how much more Celtics tickets will cost and how much more expensive their merch will get…

With the Fed’s latest policy meeting over and done, we are starting to see the return of various Fed heads making the rounds. One of the first is one of my lesser favorites, Chicago Fed President Austin Goolsbee, and yes, he is a voting member this year. 

His message was consistent with what we heard from the Fed Chair Wednesday afternoon, but gaming it out and assuming Trump goes forward with April tariffs, I don’t think we will have a clear handle on what’s in store for monetary policy until the Fed’s June meeting.

Some highlights from Goolsbee’s interview this morning:

• Fed in a wait and see mode amid uncertainty.

• Fed will be a steady hand and take a long view.

• There is strength in the "hard numbers" in the economy.

• One-time tariffs are more likely be transitory on inflation.

• Transitory is sometime between 1 month and several months.

• He believes rates will be lower in 12-18 months as long as there is progress on inflation.

• Fed commitment to 2% is rock solid.

• It is hard to say which side of mandate would win out in a stagflation scenario.

• Uncertainty could impact capital plans for corporations.

Up next today, New York Fed President and voting member, John Williams.

Mark it down.

At 11 a.m. ET, President Trump is slated to speak at the Defense Department, and he is expected to announce the winner of an Air Force fighter jet contract award that could be as much as $16 billion in size. The new fighter would replace the F-22 Raptor and is currently expected to enter service in the 2030s.

Based on reports, the two contenders are Lockheed Martin LMT and Boeing BA.

More on this as it develops later this morning.

Today brings another massive wave of options expiration.

Today, options contracts tied to more than $4.5 trillion in stocks will expire during the latest quarterly “triple-witching” event. Let’s turn to Bob Lang for some help understanding what’s behind this biggest expiration in months, and what it could mean for the market:

Today, we will be treated to a once-in-a-quarter phenomenon: a very heavy options expiration day, where the merger of stock option contracts, index futures and index options all expire at some point during the day. They call this "triple witching" (not the quad witch as the fourth member, single stock futures don’t trade any longer) as it brings rise to large volume prints and often high volatility. Remember, volatility simply means an expansion of the range, it is not necessarily bearish or bullish (but is perceived bearish).

Why is this day significant? It really is not all that important but symbolic in a way that many years ago it used to mean something significant. Back in the day (30 yrs ago and further) an options expiration was only once a month, the third Friday of the month. Today, we have expirations every week, every day that blunts the effect of volatility. Market players tend to price options and futures accordingly with volatility.

Yet, the triple-witching effect like what we will see today will end the day with a massive volume print. This is due to the exercising of in-the-money options that must occur before the end of the trading session. Stocks are either called or put to investors in the last hour of trading, so there could be a skewed amount of buy or sell orders coming in that need to be filled.

By and large, the heaviest "roll out" of positions happened about a week ago.

This means investors probably closed out positions expiring today and rolled out to later months like June, July or September. While losing a week worth of volatility it seems worth to get out of the way of the expiration.

In the end, does this mean much?

Not really for the trend follower; it is up to the markets over the following days. The market will tell us what direction it will go by using the charts/technical, and we should just follow the clues. If the expiration causes more reasoning for that direction, then so be it.

Not only did JPMorgan upgrade its rating on Super Micro Computer SMCI, the firm also lifted its price target to $45 from $35. In a note published by Samik Chatterjee:

“We are upgrading shares of Super Micro to Neutral from Underweight prior as the company has cycled past the uncertainty in relation to pending SEC filings and is on the cusp of benefitting from ramp in Blackwell based server shipments which are already seeing materially higher demand than prior generation, with additional benefit to revenue growth from higher ASPs…”

“However, we balance the upcoming strong revenue progression with potential concerns around margin trajectory, with an increasingly competitive landscape driving aggressive pricing and gross margin pressures, along with elevated expenses to effect changes in relation to recommended improvements in internal controls.”

When Nvidia NVDA reported its recent quarterly results, near-term gross margins were a headwind, but we’ve seen that before with other companies when they are ramping new products. We're seeing the same at Marvell MRVL as it ramps third-party proprietary AI chips with Amazon AMZN, Microsoft MSFT, Meta META and a few others. As those programs at Nvidia and Marvell mature, we should see margins rebound.

Upgrades

Adobe (ADBE) upgraded to Sector Weight from Underweight at KeyBanc

Adaptive Biotechnologies (ADPT) upgraded to Buy from Neutral at Goldman Sachs, target $9

Airbus (EADSY) upgraded to Hold from Sell at Berenberg

AutoZone (AZO) upgraded to Buy from Neutral at DA Davidson, target $4192

Celanese (CE) upgraded to Overweight from Sector Weight at KeyBanc, target $76

Danaher (DHR) upgraded to Buy from Neutral at Goldman Sachs, target $260

Host Hotels (HST) upgraded to Equal Weight from Underweight at Morgan Stanley, target $15

L'Oreal (LRLCY) upgraded to Outperform from Sector Perform at RBC Capital

Norwegian Cruise Line (NCLH) upgraded to Equal Weight from Underweight at Morgan Stanley, target $22

nVent Electric (NVT) upgraded to Buy from Neutral at Seaport Research, target $74

Super Micro (SMCI) upgraded to Neutral from Underweight at JPMorgan, target $45

Downgrades

Charles River (CRL) downgraded to Neutral from Buy at Goldman Sachs, target $170

FactSet (FDS) downgraded to Underweight from Equal Weight at Wells Fargo, target $402

FedEx (FDX) downgraded to Sell from Hold at Loop Capital, target $221

Icon (ICLR) downgraded to Neutral from Buy at Goldman Sachs, target $200

PDD Holdings (PDD) downgraded to Neutral from Buy at Nomura, target $130

RLJ Lodging Trust (RLJ) downgraded to Hold from Buy at Truist, target $10

Telus (TU) downgraded to Neutral from Buy at BofA

Valmont (VMI) downgraded to Market Perform from Outperform at William Blair

Others

ACNB Corp. (ACNB) initiated with an Outperform at Raymond James, target $47

Endeavour Silver (EXK) initiated with an Outperform at Raymond James

Flowco (FLOC) initiated with a Buy at Fearnley, target $34

IAC (IAC) resumed with an Overweight at JP Morgan, target $60

Kamada (KMDA) initiated with a Buy at Benchmark, target $15

Lakeland Financial (LKFN) initiated with a Market Perform at Hovde Group, target $66

NBT Bancorp (NBTB) initiated with a Market Perform at Hovde Group, target $50

Summit Therapeutics (SMMT) initiated with an Overweight at Cantor Fitzgerald

Sanofi (SNY) initiated with a Neutral at Goldman Sachs, target $65

Pro Portfolio folks know I’m closely tracking the CoreWeave IPO for a few reasons.

Early indications are the deal is expected to price next Thursday (March 27) and orders have been placed for all the available shares. With several days to go in the roadshow, this suggests the offering could price above the targeted $47-$55 range.

Good stuff for the portfolio’s position in Morgan Stanley MS, which is one of the offerings bookrunners, and a potentially positive shot in the arm for the larger IPO market.

From a Bloomberg story today got my attention:

Investors are dismissing the risks that a full-fledged trade war would pose to stocks as “monster” flows of capital keep pouring into global equity markets, Bank of America Corp.’s Michael Hartnett said.

The fact that inflows into stocks have reached a year-to-date peak and that indexes in Germany and China — two top exporters to the US — have rallied since the election of Donald Trump suggests investors are skeptical that US tariffs will cause a recession.

I agree and dedicated the Portfolio’s Weekly Roundup last week to explaining why I think June-quarter guidance could underwhelm market expectations. Earlier this week, I shared my reasoning why last night’s earnings from Nike NKE, FedEx FDX, and Micron MU would set the table for that as companies report their March-quarter results.

Over the next two week, we’ll see if Trump’s reciprocal tariffs go into effect but I’ll also be listening for company pre-announcements and their implications.

Tesla's potholes continue. From a Reuters story:

Motorists have traded in a record number of Tesla TSLA, electric vehicles this month, Edmunds data showed, amid a wave of protests against CEO Elon Musk's work as an adviser to U.S. President Donald Trump.

Tesla cars from model year 2017 or newer accounted for 1.4% of all the vehicles traded in until March 15, up from 0.4% in March last year, according to data provided to Reuters by Edmunds. Analysts at the national car shopping website said that share could grow through the second half of the month.

While at the NYSE earlier this week, I explained why folks will want to wait and get past at least Tesla’s March deliveries before revisiting the shares.

Hey folks, hopefully you’re not traveling today because you could be in for a bit of delay with Heathrow Airport closed today due to a fire at an electrical substation. That means, a lack of power.

Reports so far say more than 1,300 flights have been impacted but the ripple effect means disruptions are likely for at least the next 24 hours.

It’s also not good news for folks holding airline stocks like United Airlines UAL, American Airlines AAL and others that get a big slice of revenue and profits from international travel.

If you are one of those unfortunate ones, keep calm and carry on. We’ve also got you covered for today and yes, there is quite a bit to talk about, ranging from Nike NKE and FedEx FDX and Micron MU to some new quantum plans at Nvidia NVDA. A Fed speaker or two, and much more.

Buckle up!