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“If you’re not a risk taker, you should get the hell out of business.” – Ray Kroc
After yesterday’s E.F. Hutton impersonation by St Louis Fed President James Bullard where he literally spoke and tanked the market, equities are looking to end the week on a high note as futures have erased earlier losses and are now flat to slightly higher. After the market became increasingly concerned with a 50 bps rate hike at the March meeting, some Fed officials were out overnight (Daly and Barkin) downplaying the chances. The only economic indicator on the calendar today is Michigan Confidence which is expected to decline modestly, but the key thing to watch will be inflation expectations.
Read today’s Morning Lineup for a recap of all the major market news and events from around the world, including the latest US and international COVID trends.
One of the more notable aspects of this year’s weakness in the equity market has been the fact that there has been nowhere for investors to hide. Through yesterday’s close, both the S&P 500 and long-term US Treasuries were down over 5% YTD. While there have been other times in the past where the S&P 500 or long-term US Treasuries were down 5% over a six-week period, it’s extremely rare to see them both down 5% at the same time.
The scatter chart below shows the rolling 30-day performance of the S&P 500 ETF (SPY) and the iShares 20+ Year US Treasury ETF (TLT) for every day since 2003. During that span, there have only been 26 days where the rolling 30-trading day return for both ETFs was below negative 5% at the same time. Interesting times indeed!
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