Monday's Final Takeaways: Iran Fatigue & Dispersion Returning

0:00Welcome back to Market On Clothes. I'm Alice Coffee. Here are some thoughts of mine on today's session. If we can pull up a chart of the S&P 500, I think it'd be great to illustrate what I'm trying to discuss here as we assess today's performance. We're starting to see a little bit of market fatigue in my mind around these geopolitical headlines, the escalation. Now, the big question, it remains to be the question, is whether this is some sort of short-term oversold bounce as you can see on the right-hand side there of that chart, or if this is something a little bit more sustainable, something more meaningful. Now, all of that, of course, remains to be seen, but it's hard got to be just a little bit encouraged, not only just by today, but really the last week's action. As we watch a market, and I said earlier with George, that it is higher on a day when crude oil is also higher, in the midst of all the uncertainty and all the volatility that still exists in the Middle East, and what's coming out minutes to minute out of there,

1:02the equity market has found a way to stabilize and start to trade on its own. As we assess this and put it together and sort of stitch things and start thinking about, what is going to drive this market going forward? If we start to just grant ourselves the assumption that the equity market is getting a little bit more comfortable, if not even just complacent around geopolitics, perhaps we can look at more stock specific stories and things that just drive the equity market on a day-to-day basis in a typical normal market. One of the clearest catalysts every single quarter is earnings. We have an earnings season that's just about to embark, and despite all that's been going on and all the volatility in March, FACSET still sees over 13% growth for calendar year, or calendar quarter quarter one, and something like 19% for calendar quarter two. Well, as we get these results in the next several weeks, we're going to have a pretty good idea

2:02if those company fundamentals are keeping up with the expectations. Because right now, the only thing that's really changed over the last month has been priced. Now on the screen, we have DSPX. This is a dispersion index. And this, to me, is a mathematical representation of what I'm trying to express, which is that the rotation trade is starting to come back. In March, you had a situation where you even had, even though it was a slow motion stenloff, you started to see correlations move towards one. Everything was moving in tandem, and it was headlines out of the Middle East that were driving that movement. And if we're moving past that, at least partially, we might have a market where good earnings can drive positive price reaction and bad earnings either slow down a rally or set the stocks back. But only time we'll tell them, we're looking forward to that earnings environment that we're set to embark upon for this next season, real, real shortly. Looking ahead to tomorrow, though, not much of anything on the earnings, it's sort of the calm before the storm on that front, as well as the data front.

3:02It is going to be a little bit busier as the week ramps on on both, but certainly a little bit quieter tomorrow. That said, though, the president, seemingly drawing a line the sand, saying that Tuesday is a very critical deadline for that conflict. So it seems like, despite everything I've said, it's going to be a very geopolitical, heavy day tomorrow, and maybe we'll get some answers for the trajectory of that conflict and perhaps even some sort of deal. That's going to do it for me here, on market on close.