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“To become good at anything you have to know how to apply basic principles. To become great at it, you have to know when to violate those principles.” – Garry Kasparov
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
US equities sold off throughout the trading session on Friday on concerns that there would be another round of tariff headlines over the weekend that would send stocks lower to kick off the week. Well, we did get another round of tariff headlines (25% tariff on all steel imports to the US and the potential for reciprocal tariffs later in the week). Still, equity futures have taken the news in stride so far, and the major averages are all indicated to open with gains of between 0.4% and 0.7%. As the Super Bowl showed us last night, while the Chiefs were favored and everyone was expecting a close game, outcomes don’t always match expectations.
For just about everyone on the planet, it’s been nearly impossible to stay on top of everything going on in Washington over the last few weeks. And for those who have been trying to keep up, it’s been exhausting. In the Old Testament, even God rested on the seventh day! Since the Inauguration, though, whether you love or hate him, we can all agree that President Trump’s second term has started with a nonstop fire hose of news and headlines.
Amid the backdrop of a nonstop news flow, the market has been surprisingly calm. Over the last 100 trading days, the S&P 500 ETF (SPY) has traded in a relatively narrow range of less than 10%, and Friday’s close was essentially right where the market was just days after the election.
10% may sound like a wide range, but it ranks in just the 13th percentile of all 100-trading day periods dating back to SPY’s inception in 1993. Back in Covid, this reading spiked above 50% and during the Financial Crisis, it widened even more, peaking above 75%!
In the post-Covid era, the current narrow range is even more extreme. As shown in the chart below, there have only been two other times when the 100-trading day range dipped below 10%, and the current level of 9.4% is the lowest of any of them. Let this be a word of advice, the market may seem volatile now, but you can guarantee that things will get more volatile in the weeks ahead.
