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In this historic, for global markets, year we are fast running out of things “the market has never done before.”
For today’s entry we go to Deutsche Bank’s Jim Reid who looks at the S&P’s performance in the month of October, and writes that the broad index, which ended the supposedly most volatile month of the year 2.33% higher (with the lowest October realized vol on record) finished with a positive total return, meaning that the index has now seen a positive total return for all 10 months so far this year, the first time that this has happened in the 90 years Deutsche Bank has data for. It’s not just 2017, however, becase as Reid notes, “if you go beyond the calendar year end, October now marks the 12th positive month in succession which equals the record set in 1949-1950 and 1935-1936.” In other words, the S&P has not had a single month of negative total returns since Trump was elected almost exactly one year ago.
While there is no stopping the euphoria, Reid has a word of caution:
The S&P’s total return dipped 3.6% and 7.7%
respectively in the subsequent month when these runs ended. This record run
is coinciding with volatility back down towards the near record lows seen in the
Summer before the North Korean situation escalated. Not only has 2017 seen
such low volatility on measures such as the VIX but it has also seen a remarkable
consistency of positive returns in US equity markets.
And then this: “Will 2017 be the first year to complete the full set of positive monthly S&P 500
returns? History suggest that these times are the exception rather than the norm
so enjoy it while it lasts.”