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“A written constitution is needed to protect values against prevailing wisdom.” – Antonin Scalia

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Happy inflation week.  While the week starts off on a quiet note in terms of economic data, it will be a busy one related to inflation-related reports.  Things start off today with the New York Fed Survey of Consumer Expectations and its section on inflation expectations. Tomorrow, we’ll get the February read on CPI which is expected to increase 0.4% m/m and 3.1% y/y. That report will be followed up with PPI on Thursday and Import and Export Prices on Friday.

Although the magnitude was modest (-0.26%), last week was a rare down one for the S&P 500. As shown in the Sector Snapshot below, though, most sectors were higher. Leading the way, Utilities surged over 3%, followed by Real Estate, Materials, and Energy which all rallied over 1%.  These aren’t the types of sectors that can drive the market higher, and when large sectors like Consumer Discretionary (-2.55%), Technology (-1.62%), and Communications Services (-0.54%) fall, it’s going to be hard for the major indices to post gains. Even with last week’s declines at the index level, though, every sector except for Consumer Discretionary remains at overbought levels.

Looking ahead, one factor bulls have working in their favor is seasonality. As shown below, whether we look at the next week, month, or three months, the S&P 500’s median returns rank in the 75 or highest percentile relative to all other periods throughout the year.

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