Topley’s Top Ten – March 30, 2020

1.The 60/40-60% Stock and 40% Bond Portfolio Down -20% for Only the 4th Time in 75 Years.

Michael Santoli@MICHAELSANTOLI

The traditional retirement portfolio of stocks and bonds is down 20% for only the fourth time since WWII Michael Santoli@MICHAELSANTOLI

https://www.cnbc.com/2020/03/28/the-traditional-6040-retirement-portfolio-of-stocks-and-bonds-loses-20percent-for-only-the-fourth-time.html

VBINX-Vanguard 60/40 Index…Above 2018 Sell-Off Lows

www.stockcharts.com

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Topley’s Top Ten – March 27, 2020

1.Volatility-In the Last 2 Weeks the Dow Jones its Best Day Since 1933 and its 2 Worse Days Since 1987 Crash.

Within the last two weeks, the Dow Jones Industrial Average DJIA has experienced its best day since 1933, which came two days ago on March 24 when the index gained 11.37%, as well as its two worst days since the Black Monday crash of 1987, which came on March 12 and March 16 when the Dow notched single-day losses of -9.99% and -12.93%, respectively. This month, DJIA has had 10 days which rank in the largest one-day moves since 1985, as it has had five of its 20 best and five of its 20 worst one-day returns. To put this into perspective, since 2009 we have had only two days that ranked in the 20 best or 20 worst – December 26, 2018 when DJIA gained 4.98% and August 8, 2011 when the index lost -5.55%. No other month since 1985 has had nearly as many of the largest one day moves as March 2020 – October 2008 and October 1987 tie for second which each month owning five. While the sheer number of large moves this month has been unprecedented in recent history, as you can see in the table below, it is not unusual to have these extreme days come in close proximity.

Nasdaq Dorsey Wright  https://www.nasdaq.com/solutions/nasdaq-dorsey-wright-stock-market-equity-investment-research-company

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Topley’s Top Ten – March 24, 2020

FED Backstopping Everything
On the policy side the day started with a bang as the Fed continues to try and do everything in its power to provide liquidity and support from a monetary perspective. First and foremost the new round of quantitative easing is effectively unlimited as Treasury and MBS purchases are open-ended from a previously announced $700bn. They also announced facilities to provide support for corporate bonds, asset-backed securities, and variable rate demand notes. The Fed also expanded the previously announced Money Market Mutual Fund Liquidity Facility and the Commercial Paper Funding Facility to include a wider range of eligible securities. The Fed also expects to announce the Main Street Business Lending Program that will support lending to eligible small and medium-sized businesses. The actions take the Fed across the line – joining the ECB – in buying corporate bonds and the Fed can now buy Fixed Income ETFs which will hopefully be a big stabilizing force in what has been a troubling segment of the market over the last few weeks.-Goldman Sachs

1.2020 Crash Equal to 1929 and 1987

Stocks are falling faster than they did during the financial crisis, the crash of 1987 or the Great Depression. Investors are retreating from corporate bonds at the swiftest pace ever. An index of raw materials is at all-time lows. And funding shortages around the world have fueled a race for dollars, powering the U.S. currency to a nearly 18-year high.
By Amrith Ramkumar WSJ

https://www.wsj.com/articles/stock-market-meltdowns-historic-velocity-bruises-investors-11584955800?mod=itp_wsj

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Topley’s Top Ten – March 23, 2020

1.Big Numbers Coming for Deficit…View In Relation to GDP.


Barrons
March 18: Just how big could fiscal stimulus get? During the Great Recession, the federal budget deficit peaked around 10% of gross domestic product. Were the federal government to run a similar deficit this year, it would amount to about $2.2 trillion.
But even this 10% figure probably does not represent the true upper bound on federal borrowing. During World War II, the federal budget deficit peaked at nearly 30% of GDP in 1943, and was more than 20% each year in the 1943-45 period.
A federal budget deficit of 30% of GDP today would amount to nearly $7 trillion. Of course, financing these deficits required extraordinary efforts, such as sizable war-bond programs and direct coordination between the Treasury and the Federal Reserve. While we doubt the fiscal response will be anything quite that big, the federal government possesses significant fiscal ammunition, particularly when real interest rates on Treasury securities remain negative.—Michael Pugliese
https://www.barrons.com/articles/wall-street-views-on-the-virus-the-economy-and-the-markets-51584748842?mod=past_editions

We were at recession level deficits before recession.

http://www.crfb.org/blogs/deficit-has-never-been-high-when-economy-was-strong

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