“2023 is in no way comparable to 2008.”

How many times have you heard that over the past two months? Plenty, I’m sure. It’s an accurate assessment, but it’s wholly unhelpful. Like, “The COVID-19 pandemic is in no way comparable to the Black Plague.”

2008 is a very high bar when it comes to market-related catastrophes. As SocGen’s Albert Edwards put it this week, “If a 1930s-style Great Depression being narrowly averted is your baseline, of course things are likely to be better.”

Beyond that, though, the world isn’t highly exposed to a mountain of toxic assets which, if marked to market and unloaded in a fire sale, would result in large losses. Unless you count Treasurys (and gilts in October). And there’s no evidence of stress at any institutions that actually matter. Unless you count Credit Suisse, which is now UBS.

Jokes aside, we’re not going to look up four months from now and find ourselves reliving September of 2008. History doesn’t repeat. But, famously, it does “rhyme” and the figure below is darkly amusing in that regard.

On Thursday, in “How Bank Failures Drove Stocks Higher And Vol Lower”+, I chronicled the paradox currently unfolding across markets: Two months on from the most acute banking sector turmoil since Lehman, stocks are higher and volatility is low. Long story short, the transmission channel from bank failures to lower volatility goes through Fed expectations, rates and, ultimately, bond proxies in the equity market, which command a giant share of cap-weighted benchmarks.

It’s possible that dynamic could continue. If credit conditions stay tight, thereby substituting for the additional rate hikes the Fed planned prior to March 8, investors could keep allocating to bonds, driving down yields and driving up growth stocks through multiple expansion. Those stocks’ weight in the benchmarks could underpin the “broad” market, precisely because it’s not so broad.

But, if you like doomsday analogues, BofA’s Michael Hartnett noted that the S&P and big-cap US tech were up 11% and 15%, respectively, in the two months after Bear Stearns. Following the events of March 9 and 10 (2023), many market observers wondered if SVB was the “new Bear.” The Bear echo got a bit louder last month, when JPMorgan bought a bank.

“Just as then, credit and tech [are] leading a 10-week rally,” BofA’s Hartnett said, of the 2008 comparison. “Unlike then, defensives [are] outperforming cyclicals as REITs, banks, energy and small-caps are currently tattooed with ‘hard landing.'” If you ask Hartnett, a recession could “crack credit and tech,” just as it did during that fateful year.