March is a strange month. The U.S. markets are keeping their appetite for equities even though the central bank is giving them a hard time. This is a bit surprising, especially since the bond market tells a slightly different story.

A few days ago, the Wall Street Journal went around trying to find a successor to the TINA concept, which has been all the rage in the financial markets for years. TINA means There Is No Alternative, as in there is no alternative to investing in stocks. This is because equities crushed all other forms of investment between 2009 and 2021. In practical terms, TINA meant that despite their attempts to diversify, most investors returned to equities, with success given the gains they have made over the past decade. It wasn't until 2022 that the whole thing went haywire. Several investment banks have since tried to stick investors with a new marketing label worthy of TINA. But did they need a new heroine?

Goldman Sachs settled for TARA "There Are Reasonable Alternatives". Insight Investment preferred TIARA, "There Is A Realistic Alternative". Personally, I prefer the proposal of Deutsche Bank, which does not say much else but is a bit creative: TAPAS, for "There Are Plenty Of Alternatives". These alternatives are multiple, they can be bonds, cash or more exotic assets.

However, the transition from TINA to TARA is not necessarily obvious. Despite a rather uncertain interest rate environment and the risk of recession it brings, investors are having a hard time getting out of their beloved stocks. This is because of the severe purge that happened over the past year, which shaved off valuations and created new presumed opportunities. That's why stocks have rebounded in recent weeks. But this is also because of signs pointing to an easing of monetary policy in the near future and a reawakening of the Chinese economic momentum. In March 2023, the picture has changed a bit: central banks are not done with rate hikes and the performance of the world's second largest economy remains mediocre. All this should penalize stocks, but this is not really the case, which shows that TINA still have good times ahead of her.

This was illustrated yesterday on Wall Street, where indices bounced back after Powell’s hawkish comments. The Nasdaq 100 even recovered 0.5%, despite having plenty of risky assets, which are generally affected by higher rates. The question now is whether the stock market is directly defying the Fed or whether it is just denial. The answer could come as early as tomorrow. If the February U.S. employment numbers show that the U.S. economy is still buoyant, there should be nothing to hold the Fed back from continuing to raise rates aggressively, at least higher than investors' comfort zone. If the market interprets the data the other way around, then TARA’s out of the picture.

 

Economic highlights of the day:

More statistics on employment in the United States, with the Challenger survey in February and weekly unemployment benefit registrations. All the agenda is here. Chinese inflation was limited to 1% year-on-year in February, against 1.9% expected by economists. Producer prices continued their contraction.

The dollar was down 0.1% to EUR 0.9464 and down 0.4% to GBP 0.8402. The ounce of gold is up a bit, at 1822 dollars. Oil is stabilizing after its decline, with North Sea Brent crude at USD 83.22 per barrel and U.S. light crude WTI at USD 77.14. The yield on 10-year US debt remains near 4%. Bitcoin is falling back to USD 21,740.

 

In corporate news:

* Uber Technologies is considering whether to spin off its Uber Freight logistics business in a sale or through an initial public offering, Bloomberg reported Wednesday, citing people close to the matter.

* Silvergate Capital announced Wednesday night that it plans to wind down its business and voluntary liquidation of its operations after suffering heavy losses in the wake of FTX's bankruptcy. The cryptocurrency bank was falling 45% in pre-market trading and in its wake Coinbase, Riot Platforms and Marathon Digital were losing 3% to 4%.

* Tesla is expected to deepen its losses of the previous day after the announcement of an investigation by the U.S. highway safety agency on a steering wheel problem affecting several Model Y. The carmaker was down 3% in pre-market trading.

* General Electric confirmed its profit target for this year as demand for its aerospace business should offset the industrial conglomerate's difficulties in the renewable energy sector.

* Eli Lilly announced Wednesday that its experimental Alzheimer's treatment, solanezumab, failed to slow disease progression in a clinical trial.

* JD.Com gained 1.6 percent in pre-market trading as the Chinese online shopping group reported higher revenue and profit in the fourth quarter.

 

Analyst recommendations:

  • ABM Industries: Baird downgrades to neutral from outperform. PT up 7.4% to $51.
  • Ashtead: Liberum remains Buy with a price target raised from GBp 6200 to GBp 6550.
  • Dick's Sporting Goods: Argus Research Corp raised the target to $170 from $140. Maintains buy rating.
  • Highwoods: Morgan Stanley downgrades to equal-weight from overweight. PT down 0.8% to $26.
  • Ranger Oil: Truist Securities downgrades to hold from buy. PT up 2.3% to $43.
  • United Natural: Wells Fargo Securities cut the target to $28 from $40. Maintains equal-weight rating.