Happy Fat Tuesday,

Welcome back and hopefully you enjoyed the long weekend. On Friday markets bounced following a slightly better than expected CPI report which pushed Treasury yields to the lowest levels since October. However, equities faded into the close ending the week lower following the rolling AI disruption wrecking ball that has been making its way across sectors. For the week, the S&P 500 fell 1.4% turning slightly negative for the year, holding just above its 100d ma (~6,812). Financials led to the downside falling nearly 5% for the week while the NYSE FANG+ index fell nearly 3%. The equal weight version of the S&P 500 closed modestly higher helped by strength in yield oriented, defensive and commodity related sectors.

At least early on it does not look like financial markets are in a festive mood. S&P futures were down ~0.5% retesting the overnight lows from last Friday but have come off the worst levels after the ADP weekly jobs improved to 10.25k on average over the last four weeks up from 6.5k last week. Just before sending out the note, Iran’s Foreign Minister said an understanding on main principles with the US had been reached. Equity futures have further cut losses while oil prices have fallen ~1.5% to $67.50. Much of Asia was closed for the Lunar New Year while European indices are trading on either side of unchanged.