The stock market crash continued today, with VT closing down 3.33% versus yesterday’s close. The declines in the US were larger, with VTI down 3.91%, versus VXUS down 2.30%. The S&P was off 4.03%, the NASDAQ 4.72% and the Dow Jones Industrials 3.56%, or 1164.52 points.
The jury is still out on the bear market rally. It could be over, but last week’s lows will have to be taken out before we can pronounce the cat dead.
More interesting is that Treasuries are again showing their diversification benefits. Vanguard’s 10-30 year index fund VGLT rose 1.91%. Even the broader 1-30 year iShares index fund GOVT rose 0.54%. We’ve been calling attention to this possibility for nearly two months so are not taken by surprise. Not that diversification is ever dumb, but after being deeply underweight for most of the year so far, are glad we remedied that in time to benefit.
The good news is that these declines in asset prices represent the leading edge of a retreat in inflation. Unless they are soon reversed, relief will gradually filter into consumer prices.
VT, a convenient measure of the entire global stock market, closed at $88.88 today, down from a high of $109.39 last November 8. That date marked the beginning of the current bear market in stocks. By the time it is over, I expect VT to trade below $75, possibly below $60. I look for prices in that range before again becoming bullish on stocks.
My confidence in the reliability of near term SS forecasts continues to be less than usual. There is some good news on that front, however. I am currently testing the first core upgrade in several years. The new version should be fully vetted and tweaked in time for the mid year update in a few weeks.