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Stories Stories Business “It’s Not The Economy, Stupid; It’s Tuesday”

“It’s Not The Economy, Stupid; It’s Tuesday”
Written by Maricel Rubia     April 30, 2014    
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Housing data weaker than expected? Check. Consumer confidence weaker than expected? Check. New cycle highs in stocks – check, check, and check. Why not – after all, as we noted this morning, what really matters is JPY and the fact that it’s Tuesday. The Dow is now practically unchanged year-to-date… but ex-Tuesdays is down over 7%. Despite stocks hitting new highs, treasury yields continue to slide, gold is up, and credit markets are not making new tights. Just remember, when it comes to investing, “it’s not the economy, stupid! It’s Tuesday.. oh and tomorrow is FOMC.”

Equity market volatility

And you always buy before FOMC

We document large average excess returns on U.S. equities in anticipation of monetary policy decisions made at scheduled meetings of the Federal Open Market Committee (FOMC) in the past few decades. These pre-FOMC returns have increased over time and account for sizable fractions of total annual realized stock returns.

While other major international equity indices experienced similar pre-FOMC returns, we find no such effect in U.S. Treasury securities and money market futures.

Other major U.S. macroeconomic new announcements also do not give rise to pre-announcement excess equity returns.

Pre-FOMC returns are higher in periods when the slope of the Treasury yield curve is low, implied equity market volatility is high, and when past pre-FOMC returns have been high.

Read full article: “It’s Not The Economy, Stupid; It’s Tuesday”


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Contributor's Comment
What offends me to the point of screaming is when writers of articles such as these take the license to practice their creative writing skills and create their own vernacular, rather than just speak plain fffuuukkkinng English. Makes it even more difficult when they throw in data that I have to decipher.
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