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“We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.” – Winston Churchill
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
In an unusual picture relative to the post-war periods, US equity futures aren’t showing much in the way of gains or losses. Treasury yields and crude oil are modestly higher, while gold and Bitcoin are slightly lower. Asian stocks were higher overnight, and European stocks are mixed in early trading. Empire Manufacturing and Import Prices both just hit the tape, wth Empire exceeding forecasts while Import Prices came in weaker than expected.
It’s been ten trading days since the S&P 500’s Iran war low, and during that time, the index has rallied just under 10%. Along with that impressive gain, four sectors have rallied more than 10%, including Communication Services and Technology, which are up over 15%. Not bad for two weeks! It’s been almost an everything rally over the last two weeks as the only two sectors to trade lower are Energy and Consumer Staples, although while the latter has only experienced a marginal decline, the former is down over 10%.
Sector moves over the last two weeks have largely been a reversal of the moves since the start of the war. Energy was the only sector to rally from 2/27 through 3/30, and it’s easily the worst performer since then, erasing all its Iran war gain. Conversely, the Technology sector has also more than erased its losses from 2/27 through 3/30. Technology is also a standout. It held up relatively well on the way down (5th best performing sector), but it has still been the second-best performing sector on the way up. Another notable sector has been Consumer Staples. While no sector traded higher in both the periods from 2/27 through 3/30 and since 3/30, Consumer Staples is the only sector to trade lower in both periods.
Have you done your taxes yet? With today being the Federal Tax deadline, we wanted to highlight the S&P 500’s performance leading up to and after 4/15. The chart below shows the performance of the S&P 500 in the week before 4/15, dating back to 1990. During that period, the S&P 500’s median performance has been a gain of 0.55% with positive returns 54% of the time. Just looking at the chart, the market has been trendless leading up to the tax deadline.
Market performance in the week after Tax Day has shown an evolving pattern over the last several years. While the S&P 500’s median performance in the week after 4/15 has been the same as its performance in the week before Tax Day, there has been a weakening pattern since the turn of the century. The S&P 500’s post-Tax Day performance peaked with a 5.75% gain in the week after Tax Day in 2000, and since then, it has been gradually trending lower to the point where the S&P 500 has declined in the week after for five straight years.
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