Wall Street is actually buzzing over what the recent sell-off inside the stock market means for investors as well as what will happen next.
Gluskin Sheff as well as Associates’ David Rosenberg found one aspect of the decline very peculiar as well as warned that will is actually similar to time periods with significant market turmoil.
The S&P 500 fell officially into correction territory on Thursday, down more than 10 percent by its record reached in January.
Rosenberg noted how the yield on the 10-year Treasury note rose 16 basis points during the drop.
“I cannot tell you how rare a market condition This kind of is actually – that will yields are rising into This kind of risk pullback,” he wrote in a note to clients Friday.
Rosenberg cited how bonds rallied during the financial crisis in 2008 when the market fell as well as during some other big corrections.
“although not This kind of time. This kind of rare occurrence of bond yields rising even as stock markets decline was a feature in 1987 as well as 1994,” he added. “What these periods had in common was Fed tightening concerns, jitters over economic overheating as well as an ever-flatter yield curve. One of these years had a huge correction as well as one had massive volatility as well as rolling corrections. Pick your poison.”
In terms of the “huge correction” reference, he is actually referring to the “Black Monday” stock market crash when the Dow Jones industrial average dropped 23 percent on Oct. 19, 1987.
Rosenberg is actually chief economist as well as strategist at Gluskin Sheff.