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A 2.4% rally overnight in Japan hasn’t been enough to help the picture for US futures this morning, but we have seen some improvement following a slightly weaker-than-expected ADP report and the refunding announcement from the US Treasury.  It’s a busy day of economic ahead with Construction Spending, JOLTS, and ISM Manufacturing.  Then, at 2 PM we’ll get the interest rate decision from the FOMC. While the market is all but certain that there will be no change in rates, you never know what Powell will say at 2:30.  Once we get through all of that, we’ll get earnings from Apple (AAPL) after the bell.

In yesterday’s Chart of the Day, we discussed the “Nowhere Nasdaq” as the index is basically unchanged since the start of 2021 – a period just two months short of three years!  The S&P 500 has fared modestly better during this span, but overall returns have been, at best, ordinary.

The chart below shows the annualized performance of the S&P 500 on a total return basis over the last one, two, five, ten, and twenty years (green bars) and compares those returns to the long-term historical average (blue bars).  Outside of the five- and ten-year time windows, returns through the end of October have been weaker than average with the weakest results over the last two years (-3% vs 10.6%).  Over the last twenty years, the S&P 500’s average annualized return of 9.3% is 1.6 percentage points below the long-term average, and while that doesn’t sound like much, it adds up over time. For example, $100 invested 20 years ago that compounded at 9.3% is worth $592 today while that same $100 compounded at 10.9% would be worth $792 today.

As ‘meh’ as equity returns have been over time, they blow the returns of long-term US Treasuries out of the water.  The BofA 10+ Year US Treasury Index has now had negative 1-year rolling total returns for a record 33 straight months.

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