Stocks and Bonds Still Neck and Neck

The earnings flow is now in full swing and Netflix (NFLX) is the early leader for the title of the biggest flop as the stock is down over 10% after missing subscriber growth forecasts. In other earnings news, of the roughly 50 companies that have reported since the close yesterday, two-thirds have exceeded EPS forecasts while slightly more than half have managed to top revenues estimates. This morning’s economic slate kicks off at 8:30 with Jobless Claims and the Philly Fed report while Leading Indicators will be released at 10:00 am.

It may sound hard to believe given the recent gains in the equity market, but over the last 12-months, the S&P 500 and long-term Treasuries have had nearly identical returns. The chart below os from page two of our Morning Lineup and shows the relative strength of the S&P 500 versus the US Long Term Treasury future. When the line is rising, it indicates that stocks are outperforming bonds, while a falling line indicates periods where bonds outperformed stocks. With the line currently right at 0.0 through yesterday’s close, after the last twelve months, it has been a dead heat between the two.