Analyzing Historical Stock Market Bull Runs: TBL Weekly #130
Good morning Readers!
Please don’t tell us another coronavirus is coming. Stocks and yields certainly moved in that direction on Friday, although we can’t say that the price moves registered on any black-swan radar. Yet. Bitcoin held in quite well despite the large risk-off day. Also, thank you for your feedback on our new Master Chart Pack—we’ve included another one for you today!
In addition to Friday’s volatility, we did get the first glimpse of a potential pause or end to QT this week. As expected, Scott Bessent is ready to make his mark on the Treasury market, from issuance, to spending, to yield curve positioning, to jockeying with the Fed and its Treasury portfolio. After being a critic of Yellen’s debt management strategies—remarking just how much control Yellen had taken over monetary policy due to high bill issuance during her term—Bessent now finds himself in the spotlight with investors wondering when he’ll term out the debt (stop issuing so many bills and start issuing 10-year and 30-year Treasuries). During an interview this past week, Bessent made his position clear: he doesn’t plan on shortening the WAM (weighted average maturity), but he also has no plans on extending it. He did highlight that terming out the debt would be a lot easier once the Fed ends its balance sheet run-off, as he will no longer be competing with a negative force on the market. The key here lies in just how important it is for the current administration to avoid harming risk markets. Given the current bull run in the S&P 500, a lot of eyebrows are being raised on when exactly this train will run out of fuel (and why). This brings us to the topic of today. In today’s letter, we will look at historical S&P 500 bull runs next to:
Interest Rates
Bond Volatility
The US dollar
Banking assets
Then, we will close off the analysis with:
S&P 500 performance after yield curve un-inversions
S&P 500 next to one of our favorite economic indicators: copper-to-gold ratio
So, without further ado, grab a coffee, and let’s dive into TBL Weekly #130.
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