“The goal of a successful trader is to make the best trades. Money is secondary.” – Alexander Elder

1. Islamic State Claimed Deadly Brussels Explosions — Islamic State has claimed responsibility for three explosions that rocked Brussels on last Tuesday morning, leaving 34 people dead and 136 wounded. The jihadist group said it was behind the attacks at the city’s international airport and metro system, according to media reports. The blasts are believed to be retaliation for the arrest of Salah Abdeslam, a suspect in the Paris terror killings, who was captured in Brussels.
2. Hawkish Fed Comments Send Dollar Higher, Gold to Lowest in Nearly a Month — St. Louis Fed Jim Bullard suggesting April could work for the next boost in interest rates even as the Fed may have slashed its expectation for rate hikes this year by 50 basis points last week. The dollar moved nicely higher, and gold sharply lower, with the metal falling to about its worst price in a month.
3. Electronic Payments Pick up Steam — Apple Pay will be available later this year on sites accessed via the Safari browser on iPhones/iPads containing a TouchID fingerprint sensor as reported by Re/code. Apple Pay already supports payments carried out via mobile apps, to go with its well-known support for NFC-based in-store payments. Current online payments leader PayPal handled $20B worth of mobile transactions last year (+45% Y/Y, and 25% of total volume).
4. S&P500 Enters Overbought Territory — the equity markets are pretty extended on a trading basis, with all but one (healthcare) of the S&P macro sectors overbought. Charts below courtesy of Bespoke Investment Group.

The week ahead — Economic data from Econoday.com:

“In this business if you’re good, you’re right six times out of ten. You’re never going to be right nine times out of ten.” -Peter Lynch

1. US Retail Sales Dip in Feb — the Commerce Department said last week retail sales dipped 0.1 percent last month as automobile purchases slowed and cheaper gasoline undercut receipts at service stations. January’s sales were revised to show a 0.4 percent decline instead of the previously reported 0.2 percent increase. A sharp downward revision to January’s sales could reignite concerns about the economy’s growth prospects.
2. Bank of Japan (BOJ) Keeps Monetary Policy Steady — the BOJ kept its powder dry following the second day of its March policy meeting, but downgraded its assessment of the economy. Exports and production “have been sluggish due mainly to the effects of the slowdown in emerging economies,” while public expectations of future inflation have “recently weakened.” The central bank also maintained its pledge to increase base money at an annual pace of ¥80T ($700B) as widely expected, but clarified that money reserve funds would be excluded from the negative rates it introduced at the end of January.
3. Low Oil Prices Force Saudi Arabia Into New Austerity Drive — Reuters reported due to by low oil prices, Saudi Arabia is opening a fresh austerity drive by ordering ministries to cut their spending on contracts by at least 5%. The government ran a record budget deficit of nearly $100B last year and has been seeking ways to narrow the gap. It is laying plans to boost non-oil revenues with taxes, but that will take years to have much impact, leaving spending cuts as the main way to bring state finances under control.
4. Trump Wins the Super Tuesday, But Nomination Still Unclear –Donald Trump notched victories in the Republican presidential primaries Tuesday, winning Florida, the biggest delegate prize of the night, and driving home-state Sen. Marco Rubio out of the race. Trump also won in North Carolina and in Illinois. However, Ohio Gov. John Kasich prevailed in his home state. Hillary Clinton won the key states of Ohio and Florida Tuesday and seemed to pivot away from her Democratic opponent, Bernie Sanders.
5. FOMC Meeting — the central bank left interest rates unchanged, and scaled back the implied number of hikes that it expects from about four this year to just two. Policymakers said “Global economic and financial development continue to pose risks.”
6. US Crude Closes Above $40 — US oil closes above $40.02 a barrel, its 1st settlement above $40 in 2016 as the dollar fell, sinking to a 5-month low after the Fed cuts its rate-hike forecast. Qator oil minister said OPEC and Non-OPEC would meet in April.

The week ahead — Economic data from Econoday.com:

“Amateurs want to be right. Professionals want to make money.” — unknown

1. BOE Chief Stated Foreign investment In the U.K. At Risk if ‘Brexit’ Hits — the head of the Bank of England stated Britons should expect a drop in foreign direct investment into their country if the U.K. decides to cut membership ties with the European Union. The U.K. logged net FDI inflows of £44 billion ($62 billion) in 2014, according to a U.K. Trade & Investment department report published in June 2015. FDI is investments from overseas entities in a variety of assets, such as property, equipment and stock purchases. The U.S. and Europe are the largest investors in the U.K., according to a U.K. Trade & Investment department report published in June 2015. U.S. investors held the largest share of FDI stock at 27%, followed by the Netherlands and France, at 15% and 8%, respectively.
2. SEC’s Chairwoman: Stock-Market Overhaul Won’t Happen This Year — SEC Chairwoman Mary Jo White said the agency won’t advance any major changes this year to the fragmented system of trading U.S. stocks, after undertaking a “holistic review” of rules, including whether stock exchanges should retain the power to regulate their members.
3. ECB Cuts Rates and Expands Stimulus — the European Central Bank (ECB) delivered a surprise package of measures to kickstart Europe’s economy, cutting its main interest rates and expanding its massive bond-buying program. The ECB cut its main refinancing rate to 0.0 percent and its deposit rate to minus-0.4 percent. The bank also extended its monthly asset purchases to 80 billion euros ($87 billion), to take effect in April. In addition, the ECB will add corporate bonds to the assets it can buy — specifically, investment grade euro-denominated bonds issued by non-bank corporations. These purchases will start towards end of the first half of 2016.
4. Deutsche Bank Warns : First quarter Challenging for Entire Sector — Deutsche Bank (NYSE:DB) has warned that volatile financial markets in the first quarter, normally a strong season for banks, posed a challenge for the entire sector. Chief Executive John Cryan said in the lender’s annual report “Deutsche Bank is no exception to this,”.
5. Latest AAII Bullish Sentiment — in the latest sentiment survey, bullish sentiment from increased from 32% up to 37.4%. While this is still below the bull market average, it is actually the highest weekly reading since November and represents the fourth straight week of increases. The last time bullish sentiment increased for four straight weeks was back in October 2013, and if sentiment manages to tick higher again next week, it would be the longest streak of increases since December 2012.

The week ahead — Economic data from Econoday.com:

“The key to investing success is emotional discipline. If intelligent were the key, there would be a lot more people making money in trading” — Victor Sperandeo

1. G20 Meeting Conference in Shanghai Concluded — leaders from the world’s top economies declared “Monetary policies will continue to support economic activity and ensure price stability…but monetary policy alone cannot lead to balanced growth,”. Participants also repeated previous pledges not to engage in competitive currency devaluations and promised to “consult closely” on exchange markets.
2. China Eases Bank Lending — China’s central bank cut its reserve-requirement ration by another 0.5% point — its 5th cut in the past 12 months. The move shows further weakening of the yuan, which hit its weakest level vs. the US dollar in 3 weeks.
3. Moody’s Cuts China Outlook to Negative — Moody’s Investors Service has lowered the outlook on China’s credit rating from stable to negative, citing a weakening of fiscal metrics and a continuing fall in foreign exchange reserves. Moody’s current Aa3 rating on China is still seven notches above junk, so even if the agency were to follow up on its warning, investors wouldn’t have to suddenly start selling the country’s bonds.
4. Eurozone Recovery Loses Momentum – more deflationary pressures in the euro-zone are surfacing, raising the chances ECB President Mario Draghi will increase stimulus at a central bank meeting next week. Markit’s composite Purchasing Managers Index fell to 53 from 53.6 in January – its lowest level in 13 months – while the firm’s measure of output prices across manufacturing and services fell further below the key 50 level.
5. Auto Loans ‘s Size Hits Record — the avg amount financed for a new car or truck in Q4 rose 4.1% from last year to a record $29,551 per Experian Automotive. The avg monthly payment rose 2.3% TO $493, also a record, even as as loan terms got longer. New car loans for subprime lenders rose as well.
6. Low Priced Stocks Surge — courtesy of BIG, since 2/11, the average stock in the S&P 1500 is up an impressive 16.3%, but the performance of low priced stocks has trounced that. For example, on 2/11, there were 52 stocks in the S&P 1500 trading for less than $5 per share. Since then, the average return of those stocks is a gain of 58.9% with a median gain of 45%!

The week ahead — Economic data from Econoday.com: