Unexpectedly Intriguing!
24 February 2020

Coronavirus epidemic-related news continued to dominate the headlines most relevant for S&P 500 (Index: SPX) in the third week of February 2020, sending the index up to a new record high of 3,386.15 on Wednesday on expectations of a much bigger economic stimulus out of China, before also sending stock prices downward to close the week 1.4% lower as the virus' impact to global supply chains started to draw attention.

And yet, the S&P 500 continued to behave predictably, with its trajectory following the path defined by a dividend futures-based model assuming investors are focusing on 2020-Q4 in setting current day stock prices.

Alternative Futures - S&P 500 - 2020Q1 - Standard Model - Snapshot on 22 Feb 2020

The reason we believe investors are focusing on the distant future quarter of 2020-Q4 is because that's when investors are increasingly betting the U.S. Federal Reserve will be compelled to cut interest rates by a quarter point for a second time in 2020 to stimulate economic growth, following an already expected quarter point rate cut in 2020-Q3. The latest rate change probabilities indicated by the CME Group's FedWatch tool confirm that growing expectation:

CME Group FedWatch Tool Probabilities of Federal Funds Rate Changing at Future FOMC Meeting Dates, Snapshot on 21 February 2020

That doesn't mean that Fed officials are happy about that situation, where many are clinging to the hope they can avoid additional rate cuts. And as you'll see among the market-moving headlines of the past week below, at least one Fed official is counting on China's coronavirus epidemic dissipating to justify avoiding additional rate cuts.

Tuesday, 18 February 2020
Wednesday, 19 February 2020
Thursday, 20 February 2020
Friday, 21 February 2020

Meanwhile, if you're looking for more context for what else was going on in the Presidents Day holiday-shortened week, Barry Ritholtz lists the positives and negatives he found in the past week's economics and market-related news - we like how he framed the week's Number 1 negative!

Labels: ,

About Political Calculations

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations

Thanks in advance!

Recent Posts

Indices, Futures, and Bonds

Closing values for previous trading day.

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button


The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

Blog Roll

Market Links

Useful Election Data
Charities We Support
Shopping Guides
Recommended Reading
Recently Shopped

Seeking Alpha Certified