S&P 500 Clings to Small Gain

The video discusses the historical and recent correlations between stocks and treasuries, highlighting a shift from positive to negative correlation over the last decade. This change is attributed to deflation concerns, which have influenced market behavior. The Bernstein Strategy team suggests that as inflation normalizes, the correlation may turn positive again, impacting the traditional 60/40 allocation strategy. The video concludes with a market outlook, predicting low returns for both stocks and bonds in the coming years.

What has been the historical relationship between stocks and treasuries?

• They have always been negatively correlated.

• They have been negatively correlated for centuries.

• They have no correlation.

• They have been positively correlated for centuries.

What unusual trend has been observed in the correlation between stocks and treasuries in the last decade?

• They have both declined in value.

• They have become positively correlated.

• They have shown no correlation.

• They have become negatively correlated.

What factor is attributed to the negative correlation between stocks and treasuries?

• High inflation rates

• Deflation concerns

• Increased corporate profits

• Stable interest rates

What might cause the stock and bond correlation to turn positive again?

• A return to deflation

• A decrease in inflation

• A rise in corporate profits

• Normalization of inflation rates

What is the predicted annual return for stocks over the next 10 years?

• 10%

• 5%

• 2%

• 8%