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“Everything is bearable.“ – Wendy Byrde, Ozark
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We’re not quite sure Wendy Byrde would have had 2022’s financial market meltdown in mind when she uttered the three words above. The bad year has gotten even worse this morning as futures are already indicated to erase all of yesterday’s rally. Making matters worse, economic data this morning was very weak as Housing Starts, Building Permits, Philly Fed, Initial Jobless Claims, and Continuing Jobless Claims all came in weaker than economic forecasts. Housing Starts, for their part, were down over 14.4% m/m. This comes a day after the Fed lowered economic growth forecasts and raised its forecast for the unemployment rate in yesterday’s report of economic projections. Given all the weakness, it seems unbelievable that it has all come with the largest rate hike in nearly 30 years and promises of more to come in upcoming meetings. No one said coming out of COVID and all the stimulus programs would be easy, but they didn’t have 2022 in mind either.
In today’s Morning Lineup, there’s a lot covered as we discuss the latest moves of central banks, Asian and European markets, and overnight economic data.
We’ve been calling it the one step forward and two steps backward market for some time now, and yesterday and today provides another illustration of that pattern. After rallying over 1% following yesterday’s Fed meeting, the S&P 500 is indicated to open down about 2.0% this morning, more than erasing all of Wednesday’s gains. Keep in mind too, that even after Wednesday’s rally, the trailing five-day performance of the S&P 500 was a decline of just under 8%.
Assuming that today finishes in the red, the S&P 500 will have only traded up on 43.5% of all trading days this year. While that may not sound all that extreme, in the post-WWII period, there have only been seven other years where the percentage of up days in the first half of the year was lower, and the only two where the percentage was lower than 40% in the first half of the year were 1962 and 1970.
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