Maybe this will help explain the street’s obsession with running any and every piece of data is through a “Fed lens . . .”
As the chart below shows, monthly gains this Fed cycle show two distinct phases: From March 2003 until the June 2004, while the Fed was either easing or held rates at 1%, the S&P’s total return was 39%, or a 2.7% monthly average (in Red, below).
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Monthly S&P500 Gains/Losses (7 year)
Sources: Barron’s and Bob Bronson
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Since then, the S&P has generated weaker returns — about 18%, or less than 0.6% a month (in Blue, above).
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Quote of the Day:
“A bull market tends to bail you out of all your mistakes. Conversely, bear markets make you PAY for your mistakes.”
–Richard Russell, Dow Theory Letters
