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“Capitalism does live by crises and booms, just as a human being lives by inhaling and exhaling.” – Leon Trotsky

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

There’s no data on the economic calendar today, and there wasn’t a lot in the way of earnings reports overnight or this morning, and that has resulted in a relatively quiet (but slightly positive) tone in equity futures. Likewise, crude oil and treasury yields have seen little movement.  The most exciting area of financial markets this morning could be in the gold and crypto markets where bullion is well over $2,500 per ounce and bitcoin is trading back above $60K.

Overnight in Asia, equity indices were all over the place with Japan up nearly 2% and China down about 1%. In China, the PBoC left 1 and 5-year prime rates unchanged. European stocks have seen little movement as the STOXX 600 is little changed as July CPI came in unchanged on a m/m basis which was right in line with forecasts. On the interest rate picture, ECB member Olli Rehn was on the wires saying that risks to the growth outlook have raised the odds of a rate cut in September.

Both the S&P 500 and Nasdaq composite have finished the day higher for eight straight days now, and if the current level of the futures holds, the streak for both indices will extend to a 9th straight day today. Since its inception in 1971, the Nasdaq composite has now had 89 different streaks of eight or more daily gains in a row which works out to about three streaks every two years. For the S&P 500, these streaks have been much less common with just 30 since 1971 or about one every two years.  Concurrent streaks of eight or more days in a row have been even less common with just 15 since 1971, or about one every four years.

The charts of the S&P 500 and the Nasdaq below (both on a log scale) show where every concurrent streak of eight or more days of gains occurred, and while the average works out to about one every four years, they haven’t been evenly distributed. The current streak is the second in less than a year and the third in less than three years.  Before that, the prior two were about four years apart (2017 and then 2013), but before the 2013 streak, there were more than 21 years without a single occurrence and that included the late 1990s dot-com bubble- a period that people look back on as thinking the market did nothing but go up! In last night’s Closer report, we included an analysis of the performance of both indices following those prior streaks, and performance was mixed with forward returns that were generally weaker than the average forward returns for all periods since 1971.

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