It’s taken until the third trading day of the year, but it looks like the market may finally have its first positive open of the year.  ‘May” is the key word here as we still have to get through the December jobs report coming out shortly.  The key driver behind this morning’s gain, so far, is the move by the PBoC to cuts the reserve requirement by 100 basis points.  Over in Europe, inflation date came in weaker than expected while PMIs for the services sector were mixed.  Read today’s Bespoke Morning Lineup below for major macro and stock-specific news events, updated market internals, and commentary.

Bespoke Morning Lineup – 1/4/19

Now that the S&P 500 is down 2.35% just two trading days into the year, the US equity market is off to its worst two-day start since 2000.  It is also just the sixth time in the index’s history that it has seen a decline of 2% or more in the first two trading days of the year.  In other words, it’s not often that it gets worse than this!  Look on the bright side, though, we could only be down 1.35%!

What are we talking about?  The table below lists every year since 1928 where the S&P 500 was down 1% or more YTD two trading days into the year.  For each year, we also show the S&P 500’s performance over the following day, week, the rest of January, and the rest of the year.  At the bottom of the table, we list the S&P 500’s average return for all of the dates listed as well as just the shaded years where the S&P 500 was down more than 2%.  Obviously, it’s a small sample size, and we wouldn’t put a ton of weight into the results, but the average and median returns following years where the S&P 500 started the year down 1%+ are considerably less than the returns following years where the index kicked off the year with a decline of more than 2%.

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