While the S&P 500 futures market occupied a relatively narrow range overnight, now that the US is trading there have been some more big swings intraday. After trading up at the open, stocks lost almost 1% through mid-morning lows. They then rallied more than 1.1% and have since pulled back again. That kind of intraday volatility is also met with closing price volatility. The VIX has been around 20 over the past few weeks, and we’ve been seeing a lot more 1% swings. In the chart below, we show the share of days where the S&P 500 either fell or rose by 1% over the past 3 months. From December 8th to January 25th, that rolling 3 month measure was zero…not a single 1% day! Over the last few months, though, the share of 1% days has rocketed higher. Currently, 38% of trading days over the past 3 months have been 1% moves. Only periods of volatility right at the start of the bull market, early 2010, mid 2011, and early 2016 saw higher shares of days with 1% or greater moves.

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April has historically been one of the strongest months of the year for the stock market.  Recently, though, the gains have all come in the second half of the month once Tax Day (April 15th) passes.

You can clearly identify this trend using our Stock Seasonality tool, which is available to Bespoke Premium and Bespoke Institutional clients.

We ran a screen to find the median change of S&P 500 sectors over the last 12 years from April 2nd through April 15th, which generated the chart below.  As shown, the S&P 500 has seen a median decline of 0.70% during this time frame, while just two of eleven sectors have posted median gains.

When we run the same screen but look at the period from April 15th through April 30th, the chart below shows that the S&P 500 has seen a median change of +2.13%.  All eleven sectors have posted median gains, and four sectors have gained more than 2% (Cons. Discret., Tech, Industrials, and Real Estate).

Clearly the back half of April has been much stronger than the front half in recent years.

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With the first quarter of 2018 now behind us, below is a full rundown of asset class performance during the quarter.  For each ETF in the matrix, we also include its performance in March as well as since the 1/26 high for the S&P 500.

As shown, the S&P 500 (SPY), Dow 30 (DIA), and Nasdaq 100 (QQQ) all fell quite significantly in March, which was enough to drag both the S&P 500 and Dow 30 into negative territory for the quarter.  For the S&P 500, Q1 2018 was the first down quarter since Q3 2015, and it was the first down first quarter since Q1 2009.

While large caps got hit in March, smallcaps and midcaps actually posted solid gains.  Looking at S&P 500 sectors, the worst performing areas in March were Financials, Materials, and Technology, while Energy and Utilities were actually up nicely.  For the full first quarter, though, Technology and Consumer Discretionary were the only two sectors in the black.

Outside of the US, Canada was down the most in Q1, while Brazil was up the most.  Commodities generally did well in Q1 with the exception of natural gas and silver, while Treasury ETFs fell across the board (as interest rates rose).

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Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week. The links are mostly market related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.

A Billionaire Cosplays

Robert Mercer’s Secret Adventure as a New Mexico Cop by Zachary Mider (Bloomberg)

A billionaire former hedge fund manager and political kingmaker spent time as a reserve deputy in New Mexico, which grants him the ability to carry concealed firearms anywhere in the country. [Link]

Digital Security

A Cyberattack Hobbles Atlanta, and Security Experts Shudder by Alan Blinder and Nicole Perlroth (NYT)

The city of Atlanta suffered a massive ransomware attack last week, with almost every digital corridor of local government locked up by a massive virus incursion. [Link; soft paywall]

Facebook Has Had Countless Privacy Scandals. But This One Is Different. by Carlie Warzel (Buzzfeed)

While there are tempting political narratives and blame games to play with the Cambridge Analytica/Facebook privacy scandal, the broader question of how to manage privacy in an era of big data collection where users are the product suggests it might be around a while. [Link]

Remarkable People

Biography (Stephen Wiltshire)

London-based artist Stephen Wiltshire is able to draw entire cityscapes, accurately and freehand, from a single trip up in a helicopter to see the skyline. He is mute and autistic. [Link]

The Former Khmer Rouge Slave Who Blew the Whistle on Wells Fargo by Emily Flitter (NYT)

Duke Tran fled Vietnam as a teenager, ending up a slave to the Khmer Rouge in Cambodia. Eventually, he made his way to the US, becoming a Wells Fargo debt collection associate and enjoying a happy middle class life. Then, he was fired for refusing to lie to customers about their foreclosures. Since, he’s become a millionaire on the back of massive whistleblower awards courtesy of massive fines levied on the bank. [Link; soft paywall]

Politics

Poll: Majority of Americans say they are not seeing change in paychecks due to tax cuts by Rebecca Savransky (The Hill)

While predictable (recent tax cuts were overwhelmingly focused on the upper end of the spectrum with only marginal changes on average for most taxpayers), it’s nonetheless a worrying sign that two months into lower withholding most Americans still haven’t noticed a change in their paycheck thanks to tax cuts. [Link; auto-playing video]

Progress

South Sudan Halts Spread of Crippling Guinea Worms by Donald G. McNeil (NYT)

A global campaign led by former President Jimmy Carter has been working to eradicate Guinea worm for more than 30 years. The disease is a parasite found in ponds; with South Sudan eliminating the disease there were only 15 cases in Chad and 15 in Ethiopia, meaning the end of the parasite is nigh.  [Link; soft paywall]

International Economics

Switzerland: Balance of payments by Nadia Gharbi (Pictet Wealth Management)

An explanation for the persistent and massive current account surplus run by Switzerland, despite a strengthening CHF. [Link; 7 page PDF]

Good Eats

Why Some of Queens’ Best Restaurants Are Leaving for Pricier Boroughs by Katie Honan (Eater NY)

As restaurants in Queens get attention, they leverage greater pricing power in other boroughs to raise prices at new locations, often leaving price-sensitive Queens customers behind. [Link]

Crypto

The Dark Web’s Favorite Currency Is Less Untraceable Than It Seems by Andy Greenberg (Wired)

While Monero was designed to make payment tracing impossible, a new paper suggests that the mixing of payments which is designed to preserve anonymity can still be analyzed to determine where payments come from and go to. [Link]

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Have a great Sunday!