Deutsche Bank: The S&P Has Only Done This 8 Times In 89 Years

Deutsche Bank’s Binky Chadha is a guy who isn’t afraid to be bullish.

He is, in fact, one of Wall Street’s biggest bulls.

For those interested in hearing the argument (which hasn’t exactly aged well on the Treasury forecast side) straight from the bull’s … errr…. straight from the “horse’s” mouth, you can watch him explain things in a Bloomberg TV interview posted back in February.

And while we’re not particularly enamored with his general outlook, what we will say for Binky and his partner in “crime” Parag Thatte, is that the duo churn out some aesthetically pleasing charts.

Well, their latest was out last week and although it’s characteristically optimistic on the prospects for an upturn in US growth and for “a broader-based more sustainable move up in the S&P,” they do flag an interesting anomaly that appears to have coincided with a downturn in US macro. Consider this:

Deutsche goes on to note that were it not for the ubiquitous corporate bid (which, you’ll recall, has accounted for the lion’s share of equity demand over the past several years), stocks might have moved materially lower. In other words, buybacks put a floor under things:

[In late May] the S&P 500 tentatively broke out of the unusually tight +/-1.3% trading range (2340-2400) that it had been in since mid-February.

(Click on image to enlarge)

Ranges1

Such tight trading ranges for the S&P 500 that extended for 3 months or longer have been very unusual historically, with only 8 such comparable prior episodes (since 1928).

(Click on image to enlarge)

Ranges2

What kept the equity market range bound? In our reading: A flattening in the macro data and negative surprises.

(Click on image to enlarge)

Ranges3

Deutsche goes on to note that were it not for the ubiquitous corporate bid (which, you’ll recall, has accounted for the lion’s share of equity demand over the past several years), stocks might have moved materially lower. In other words, buybacks put a floor under things:

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