Dow30 2008 vs 2020Ytd

Graphs - Dow30 2008/2020

Current crisis feels and looks like 2008 x21 faster.

 

Looking at the intraday price action last week I noticed it was very similar to what I remember of 2008. When we look at the year to date 20 min bars on the Dow30 and compare to the 2008/2009 daily price action the similarities are quite striking.  Overlaying some of the Fed policy responses and it looks like a very similar path except about 21 times faster ( 21 bars /day).

 

It wasn’t until the Fed expanded QE1 to $1.25T in March 2009 that the bottom in the market was achieved. Last week we experienced a further increase in the balance sheet with QE unlimited. (Fed balance sheet has already expanded by $942bn to Friday 27th). This has been coupled with the $2T stimulas bill and upto $4T loans to businesses. It looks and feels a lot like March 2009.

The policy response has been extremely quick. Please see our last article – Vol as a driver of future returns.

By Mark Ellis, CEO Nutshell Asset Management

30th March 2020