March 2023 Market Brief
“Figures often beguile me, particularly when I have the arranging of them myself.” Mark Twain, Chapters from my Autobiography
Beware of the ides of March warns of trouble brewing in the month of March. The Ides of March specifically refers to the 74th day in the Roman calendar which corresponds to March 15th. That date is often associated with terrible events (Caesar’s murder) but is historically not unluckier than a Friday the 13th or any other day of the year. In 2023, the Ides of March will be a big trading day as CPI data from February will be released the day before on March 14th. The CPI report is the last major data point before the Fed meeting March 22nd which should see a 25bps hike. However, the Fed has been working tirelessly to convince the market they are serious about holding rates higher for longer. We have seen the terminal rate creep up to 5.4% as well as expectations for a June hike are now high.
March also comes with the statistically delightful March Madness NCAA basketball tournaments. Per the NCAA1, there has never been a perfect bracket. The best bracket in history came in 2019 when an Ohio man correctly predicted the entire 2019 NCAA tournament up to the sweet 16. To put that in context, in 2022 the last perfect bracket fell on the first Friday of the tournament. Why is a perfect bracket so difficult? With a 63-game slate, and using a 50-50 coin flip method to determine winners, it is estimated that the odds of a perfect bracket are 1 in 9.2 quintillion, that’s 18 zeros. The math is 1 in 263. Meaning, you have a better chance of winning the Powerball twice in a row or getting hit with a piece of random space junk falling from the sky.
The major statistical quandary is every year an underdog has won at least one game in an upset. In 2018, The University of Maryland, Baltimore County (UMBC) Retrievers, a #16 seed, became the first team to upset a #1 seed by beating Virginia in the first round. The NCAA1 estimates that the average number of total tournament upsets is 12.4 with 6.2 upsets occurring in the first round. In 2007 there were only 4 total upsets and in 2014 there were 19. Historically speaking, you should pick at least one of the #2 or #3 seeds to lose by the second round, the question is who?