S&P 500 Undergoes Potential Regime Change As Volatility Continues

Posted: Apr 06, 2020 1:05 PM
 S&P 500 Undergoes Potential Regime Change As Volatility Continues

Source: AP Photo/Mark Lennihan

Picking up the action from last Thursday, 2 April 2020, we find that expectations for future dividends in the S&P 500 (Index: SPX) continued to deteriorate through the end of 2020. 

To see the chart, click here.

The futures data is suggesting that while dividend reductions have begun to be announced, investors are still expecting many firms to pay out a good portion of the cash they've been setting aside for their 2020-Q2 dividends before suspending them for the rest of 2020, before perhaps resuming a portion of them in early 2021.

At the same time, we're catching up with what may have been a regime change for how investors are weighting the changes they expect in the growth rate of dividends per share, which appears to have taken hold in the stock market beginning on Monday, 23 March 2020. We'll discuss our thinking more on this topic later this week, but for now, we've updated the alternative futures spaghetti forecast chart to show the effect of that potential change.

To see the chart, click here.

Compared to last week's market changing news headlines, the week ending Friday, 3 April 2020 was relatively muted.

Monday, 30 March 2020
Tuesday, 31 March 2020
Wednesday, 1 April 2020
Thursday, 2 April 2020
Friday, 3 April 2020

Meanwhile, Barry Ritholtz forcefully extracted the positives and negatives he could find in the past week's economics and market-related news.

If you're accessing this article on a site that republishes our RSS news feed, since we've been appending daily updates to our regular weekly analysis in our S&P 500 chaos series during the market's current period of heightened volatility, you may want to follow this link to catch up with the latest!