Below excerpt courtesy this a.m.’s edition of macro-strategy newsletter “Sight Beyond Sight”

Today is the first time in recent memory that investors are waking up to a meaningful gap down in US equity index futures.

By virtue of the fact that S&P 500 futures were down ~1.0% at one point this morning, the 57-day streak with no 1% up/down move in the index level has finally been broken today and that is clearly a talking point.

The other interesting observation for US equity participants is that Russell 2000 futures (symbol: RTAU4) are currently down -2.2%. That is much more than the German DAX -1.6%) and commensurate with the weakness in the Spanish IBEX (-2.5%) and Italian MIB (-2.15%) indices.

Given that investor sentiment is also very fragile at the moment, and despite this being a very immature approach to investing and nearly always misguided, the fact is a 2-3% move lower in the index always triggers calls for a larger 7-10% correction.

Our view is different. Continue reading →