Keep pulling the thread on Federal Reserve.
Over a three-day trading period starting March 12, 2020, the S&P 500 experienced daily price moves of -9.5%, +9.3%, and -12%.
Bill Ackman's credit derivatives hedge generated a profit of $2.6 billion during the March 2020 market crash.
On March 23, 2020, the Federal Open Market Committee announced it would purchase Treasury and mortgage-backed securities in unlimited amounts to support market functioning.
Dean Kernutt believes the market is underpricing the risk of a U.S. Treasury crisis, a potential fourth type of 'risk-off' event, driven by high interest costs and political gridlock on entitlement reform.
In 2022, the S&P 500 fell by 19% and the TLT ETF lost 33% of its value.
In the liquidation phase of the March 2020 crash, from March 9 to March 18, both the TLT ETF and the S&P 500 fell concurrently, by 15% and 13% respectively.
Prior to the 2013 'taper tantrum', years of quantitative easing by the Federal Reserve had pushed real 10-year Treasury yields to a low of -65 basis points.
The market downturns of the 2013 'taper tantrum' and Q4 2018 were resolved after the Federal Reserve adopted a dovish policy, which was enabled by year-over-year PCE inflation running at approximately 1.6%.
In 2022, days where both the S&P 500 and the TLT ETF fell by 1% or more became common, a phenomenon that was extremely rare in the preceding era.
At the end of 2021, with 10-year real yields at -100 basis points, U.S. stocks appeared cheap only in relative terms compared to bonds, not on an absolute basis.
A significant portion of Paul Tudor Jones's profits during the 1987 crash came from trading bond futures, based on the correct assumption that the Federal Reserve would inject liquidity into the market.
During the March 2020 liquidation event, the U.S. dollar rallied 6% in 9 days, while gold fell 10% and crude oil fell 27.8% as investors sold assets for cash.