See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“All life is, is a series of consecutive risks joined together with hairs stood on end.” L. Ron Hubbard

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Hell, meet the last three weeks in the market. After hitting a record high on 2/19, the S&P 500 has seemingly done nothing but trade lower, and the Nasdaq has been even weaker. As bad as the last three weeks have been, though, they pale compared to the same three weeks five years ago. You may already be aware, but just as the S&P 500 peaked this year on 2/19, it also peaked on 2/19 of 2020, and in the three weeks that followed the 2020 peak, the S&P 500 plunged over 19%. Now, that’s bad! In the three weeks since this year’s high, the S&P 500 is ‘only’ down 8.6%.

Back then, we were dealing with fears and uncertainty of a collapse in the entire global economy from a virus we knew very little about. As much uncertainty as there is now regarding the economy and global trade relations, it’s nothing like five years ago. However, just like back in Covid when the markets started to recover once it saw that the worst fears of a complete economic catastrophe would not be realized, this episode will continue until signs emerge that a full-blown trade war won’t be realized. When we get there is anyone’s guess, but it will look obvious in hindsight.

The chart below shows the S&P 500’s rolling 15-day rate of change since 1953, with the red line showing the weakest reading of the current period which was a decline of 9.3% through 3/12. This current episode of weakness is far from the most extreme reading ever. There were much deeper drawdowns back during Covid, the Financial Crisis, and after the 1987 crash, to name a few.  The current period does, however, rank in the 98th percentile relative to all other periods since 1953. Even just looking at the last ten years, there were deeper 15-day declines in 2022, 2020, late 2018, early 2016, and August 2015. While you may recall the causes behind some or most of these episodes, we would bet that the vast majority of people would not know the catalyst behind each of them off the top of their heads. The odds are (hopefully) that ten years from now, most people looking back at this decline will not remember what had the market so concerned.

This morning, market fears remain at the forefront. Both the S&P 500 and Nasdaq are set to give back about half of yesterday’s gains. Investor sentiment also remains very weak. The weekly poll from the American Association of Individual Investors (AAII) showed that bearish sentiment was above 55% for the third straight week. The only other time since 1987 that bearish sentiment was above the ‘speed limit’ was in the three weeks ending March 4, 2009.

The main economic report of the day was the February PPI, which came in weaker than expected. Despite the weaker reading, equity futures have barely budged. Perhaps recent comments from President Trump threatening 200% tariffs on all European alcohol imports are weighing more on sentiment.

See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“It must be the policy of the United States to support free peoples who are resisting attempted subjugation by armed minorities or by outside pressures.” – Harry Truman, 3/12/47

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

Can we squeeze out a positive day in the market?  The S&P 500 finished the day down 0.76% yesterday, but it almost seemed like a positive day in some ways.  That’s how miserable the last three weeks have been for bulls!  This morning, US futures were firmly in the green heading into the February CPI report. That report came in weaker than expected, providing a further boost- at least for now.

78 years ago today, President Harry Truman asked Congress to appropriate $400 million to provide economic, military, and political assistance to democratic countries facing the threat of communist forces. His proclamation set in motion the journey of the US on the path from isolationism to a leader on the global stage, taking an active role in pushing back against the growth of the Soviet Union during the Cold War. Whether the US became too active in global affairs in the ensuing eight decades is up for debate. However, whatever direction US foreign policy has headed over the last eighty years, it appears to be going the other way now.

Focusing more on the short-term, the S&P 500 peaked three weeks ago today. In the 14 trading days since then, the S&P 500 has declined 9.3%, and all eleven sectors have posted declines. On the downside, just three sectors – Communication Services, Technology, and Consumer Discretionary – are underperforming the S&P 500. Health Care has held up better than any other sector with a decline of less than 1%, but Real Estate and Consumer Staples have also held up relatively well.

With a decline of nearly 15%, the Consumer Discretionary sector has been the worst performing sector in the market, and the bulk of that decline has been the result of mega-cap stocks in the sector like Tesla (TSLA) and Amazon.com (AMZN). These declines have pushed the sector’s margin of underperformance versus the S&P 500 over the last three weeks to historical extremes.

The chart below shows the 15-day performance spread between the Consumer Discretionary sector and the S&P 500 since 1990. Just recently, it had underperformed the S&P 500 by over eight percentage points, which was an extreme reached just a handful of other times in the last 35 years. As extreme as the underperformance has been in the last three weeks, it has mostly been a reversal of the extreme outperformance the sector experienced late last year.