The widely watched S&P 500 ended last week down sharply in the two days following Trump’s “Liberation Day” tariff directives. According to Bespoke Investment Group, there have only been three other periods since 1952 when the current five-day trading week began that we have had two-day drops of 10%+: October 1987, November 2008, and March 2020.
Sentiment surveys are extremely bearish while investors have once again flocked to US Treasuries as the ultimate safe haven asset class. The 10-Year Treasury yield crossed below 4% last week. The unwinding of trades by hedge funds could drive the yield higher in the coming days.
I have been running on overdrive to review and stress-test every model on our radar. I have been diligently screening each model portfolio, dissecting performance metrics, and digging deep into the differences in volatility and maximum drawdowns.
No stone left unturned, no chart and indicator left un-clicked. In the coming days, I will be updating and sharing insights on several of the models.
I’m a participant in a number of active chat groups with partners and investors, where discussions range from the macro outlook to the unwinding of the carry trade positions. Nobody is right all the time. Our constant dialogue is the source of many of our best ideas.
While headlines swirl and prices swing, it is critical to weigh the probabilities of different scenarios and size positions accordingly. Probably out of my mind, I still see a new all time high this year after this round of madness.