Weekly Hotline: March 6, 2026
Markets moved decisively downward throughout the week as investors grappled with the potential fallout of the new war in the Middle East (see our Market Insight on Key Lessons from Past Military Conflicts).
MACROECONOMIC UPDATE
- The Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) and the ISM Services PMI came in stronger than expected in a positive development for the economy. The Manufacturing PMI ticked down slightly from 52.6% to 52.4% and the Services PMI moved up from 53.8% to 56.1%. However, there continues to be significant potential for continued volatility. Read our Market Insight on these reports.
- The Jobs Report for February showed considerable weakness as nonfarm payrolls fell by -92,000. It is important to note that some of these losses are likely temporary as they can be attributed to strike activity in the health care sector. However, the weakness is broad and expanding as the December and January payroll figures were also revised downward a total of -69,000. At the same time, the unemployment rate increased from 4.3% to 4.4%. If the labor market continues to cool it could lead to further trouble for the U.S. economy.
TECHNICAL UPDATE
- The InvesTech Housing [Bubble] Bellwether Barometer fell -7.4% this week as rising long term bond yields pushed mortgage rates higher after a brief period of reprieve. Concerns over affordability continue to plague the stalling housing market. If the Housing [Bubble] Bellwether Barometer continues to fall, it would be an important sign of further weakness in housing which could spread to the broader financial markets and economy.
- Our InvesTech Gorilla Index and Artificial Intelligence Index moved slightly above their recent lows this week as the mega-caps and speculative investments try to recover from their rapid declines over the last few months. However, both these Indexes remain significantly below their peaks from late last year. It will be important to closely watch these indicators as a decline below recent lows would confirm that speculative behavior is rapidly unwinding and the market is at risk of falling further.
INVESTECH MODEL FUND PORTFOLIO
There are no changes to the Model Fund Portfolio this week, which remains resilient year-to-date as our inverse index (bear fund) ETF and energy sector ETF exhibited noteworthy strength this week. The Portfolio is comprised of 58% long positions, 7% in an inverse index ETF, 5% in an intermediate Treasury ETF, and 30% cash held in short-term Treasurys or a money market fund. This results in 51% net equity exposure.
