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“In the midst of chaos, there is also opportunity” – Sun-Tzu

Futures are higher this morning and attempting to regain some of the losses from Monday’s weak start to the week. Both the DJIA and the S&P 500 are on pace to erase more than half of yesterday’s losses, but the Nasdaq is a bit further behind.

We got our first economic indicator of the week today with the NFIB Small Business Optimism Index which dropped to 95.9 versus estimates for a reading of 100.2.  That wide gap actually represents the biggest miss relative to expectations since July 2015, but before reading too much into it we would note that over time, this index has tended to have some political undertones to it.

Be sure to check out today’s Morning Lineup for updates on the latest market news and events, a discussion of stock performance in Hong Kong, Chinese economic data, an update on the latest national and international COVID trends, and much more.

Yesterday was an interesting day as even though the VIX jumped more than two points, the yield on the 10-year US Treasury was also up by 2 basis points (bps).  Normally, on days when the VIX has a big gain, investors are rotating into treasuries and pushing yields lower.  The chart below shows the S&P 500 over the last ten years, and each dot represents days where the VIX was up at least two points and the yield on the 10-year also jumped more than two bps.  In the last decade, there have only been 14 other days where we saw similar moves with the most recent occurring back in March 2020, but looking through the chart they have occurred at all different points of the market cycle.