I have on various occasions in the past few months referenced numerous periods in history with regard to today's market and economic back drop.
Included in those periods have been 2000, 1987 and 1929. In this piece I am putting 2000 to the side for the moment to focus on 3 periods. Today, 1987 and 1929.
In that respect I am focusing on the chart below. This is a comparison of price action on the S&P today (4th April 2025), on 16 Oct 1987 and the DJIA on 25 October 1929. These are all Fridays.
1929 (Red chart) By Friday the 25th of October 1929 (in the midst of ongoing discussions about implementing the Smoot Hawley Tariff Act) the DJIA was down 21% from the highs 38 trading days after that high was posted. On Monday 28th October it fell13% and on Tuesday 29th October it fell another 13%. Hawkishness by the Fed was considered a contributing factor to this fall
1987 (Blue chart) By Friday 16th October the S&P was down 17% from the highs 38 trading days after that high was posted. On Monday 19th October it fell 20%. It fell again on Tuesday another 4%. However, this time (unlike 1929) the Fed did react cutting the Fed Funds rate by 37 bp's on that Monday which was the start of the stabilisation, and the lows were in. There were various reasons (including program trading) given for the crash. Trade disputes were also part and parcel of the backdrop in 1987.
2025 (Black chart) It is Friday 4th April and today the S&P is 17% off the high traded 32 trading days ago. The tariff backdrop is deteriorating rapidly with "Tit For Tat" responses similar to what was seen during the Smoot Hawley Tariff period. Europe has talked of a response and China delivered one today in the shape of 34% tariffs. Not only did Jay Powell not deliver some comfort to the market today he actually raised the bar even further with his increased inflation hawkishness
I hear a number of people talking about the "HOPE" (A very bad investment method) of some positive developments over the weekend. If so, then great. However, the charts below say to me that it is ok to have that "opportunity loss" of missing that outcome so as to have the certainty of a positive development.
I say that because these charts suggest that absent that "HOPE" translating into reality we could be set up for a very ugly Monday-Tuesday next week.