Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Dr. Voodoo who wrote (155065)

3/23/2020 10:53:12 AM

From: TobagoJack

2 Recommendations

Recommended By
Lee Lichterman III
Secret_Agent_Man

Respond to of 217588

Re <<Thursday>>

... is an eternity + 1 day from now, so 1.5 eternities

Just in in-tray, Citi

CitiFX Wire Market Commentary - FXLM - Intended for Institutional clients only

Will the Fed's Big bazooka turn the Equity market? We don't think so.

By Tom Fitzpatrick

Tom Fitzpatrick

1-212-723-1344

thomas.fitzpatrick@citi.com

Sophia Chen

1-212-723-1854

sophia2.chen@citi.com

· In the table below we expand out from our note of 13 March which showed the 10 biggest percentage up days seen on the S&P to incorporate the 15 biggest.

· When we do that we see a few interesting things.

– 10 of these days took place in 1929-1933 (7 of them from 1929-1932) in the heart of the biggest fall seen in a major US Equity market until the NASDAQ collapse on 2000-2002. 4 of them took place before the low was eventually posted in July 1932

– 1 of them took place during World War II. The bear market did not end until April 1942

– 1 of them took place in October 1987 (The ’87 crash). The day after the low was put in

– 2 of them took place in Oct. 2008- (The Great Financial crisis) Interim lows were posted on 10 October 2008 and again on 21 Nov 2008 before the trend low on 06 March 2009.

– 1 of them took place this month on 13 March.

· We can safely say that:

– 1987 was the only time above that the first historically large daily bounce came at the turn. However in 1987 there was no crisis, it was a purely market event that did not see an economic downturn and does not really seem a fair comparison to today’s picture.

– 1929-1932 was the Great Depression.

– 1939 was during World War II

– 2006-2008 was the great financial crisis

– 2020-? is the Global Pandemic

· In none of the periods of great stress did that first historically large daily rally constitute the low (as it did not this time either).

· At the moment the path that still looks to us most similar is 2008 where we again saw a large 1 day rally towards the end of the month but this again only saw an interim low put in place. As we have noted the performance of the VXO (Old VIX that also incorporates 1987) is also interesting having traded above 100% this month for only the 3rd time in its history (Oct 1987 and Oct 2008 being the other 2 times with this peak at 101% very similar to the peak at 103% in October 2008)

· Today we got another “Bazooka” package from the Fed and at this time the Equity market reaction is again underwhelming. This shows a clear distinction between periods like this and 2006-2008; 1939 and 1029-1932 (Crises) with 1987 (Market event).

· So despite the huge policy announcements today this underlying crisis is still with us. The monetary policy measures and no doubt the coming large Fiscal measures will certainly put the Economy and likely Equity market in a good position to recover when the dust settles but at this point it is far from clear that we are at this point.

· We still believe that the danger of even lower levels on equity markets as we have previously articulated remain a very real danger.