Republic Risk: The Fed Cometh… (And NVIDIA Giveth?)

This is historically a nasty two-week stretch for the U.S. markets. It's best to play defense as we barrel toward the March 15 Quad Witching event. Don't be stunned by a rise in volatility this week.

Dear  Fellow Expat:

Good morning. 

Welcome back.

Founders, thanks for joining me yesterday for an overdue market recap and a deeper dive into our fundamentals and strategies. The video was a bit overdue, but we went for 40 minutes. We covered liquidity, the portfolio, and why China is in a lot of trouble.

Let’s get to the Holiday-shortened week and a futures market that is down a bit (although oil is moving higher because of more problems in the Red Sea).

We are entering - historically - the worst two-week period of the financial markets on an annual basis since 1928. And while past performance doesn’t guarantee future outcomes, most investors clearly understand seasonality. 

Source: barchart, Bloomberg, via Syz Group

The chart above shows that the average return since 1928 is about negative 1% for the back half of February. That typically follows gains in the first two weeks of the month. 

Several negative catalysts could turn this recent rally to all-time highs into a short-term selloff. The concentration of gains this year has been in the Top 5 stocks in the S&P 500, and three tech stocks have driven 90% of the gains in the Technology Sector. 

We’re seeing the highest concentration of these Mega Cap names… ever. 

There are two things to watch.