Sir John Templeton: “Bull markets are born on despair, grow on skepticism, mature on optimism and die on euphoria.”

1. Consumer Spending Growth Moderated in February and Core Inflation Eased — Consumer spending increased a seasonally adjusted 0.2% in February, from January’s revised 2% increase, which was the largest one-month gain in nearly two years, the Commerce Department said Friday. When adjusted for rising prices, spending fell 0.1% in February from the prior month, after rising a revised 1.5% in January.
The core personal-consumption expenditures price index—one of the Fed’s preferred gauges of inflation—climbed 4.6% in February from a year earlier, down from 4.7% the prior month. Many economists see the core measure, which omits volatile food and energy prices, as a better predictor of future inflation.
2. White House Calls for Tougher Midsize Bank Rules — The recommendations call for new rules from the Federal Reserve and other banking regulators that would apply to banks with $100 billion to $250 billion in assets. There were approximately 20 firms in that asset range as of the end of 2022, according to the Federal Financial Institutions Examination Council.
The Fed is already rethinking a number of its rules related to those banks after Silicon Valley Bank and Signature Bank failed. Changes could include tougher capital and liquidity requirements, as well as steps to strengthen stress tests that assess banks’ ability to weather a hypothetical severe downturn.
3. New EV Rules Mean Fewer Models Eligible for Tax Credit — The new rules, issued by the Treasury Department Friday, aim to make the U.S. less reliant on batteries and critical minerals shipped from China. For car buyers to claim the full $7,500 tax credit, the batteries must contain set amounts of components made in North America and critical minerals sourced in the U.S. or from certain friendly countries.
The criteria will take effect on April 18, when a list of models that qualify for the tax credit will be issued. Until then, consumers can claim the full tax credit when they buy vehicles that are currently eligible, before some are expected to drop off the list.
4. Nasdaq turns in best performance since 2020 — The S&P 500 rose 7% in the first quarter, while the Dow Jones Industrial Average added 0.4%. The Nasdaq Composite soared. The technology-heavy index jumped 17%, outperforming the Dow industrials by the widest margin since 2001. Overall, it was Nasdaq’s best quarter since the second quarter of 2020. Recent projections show Fed officials expect the federal-funds rate to rise to at least 5.1% from its current range of 4.75% to 5%. That suggests the Fed could push through one more quarter-point interest-rate increase and then hold rates at that level for the remainder of the year.

The week ahead — Economic data from Econoday.com: