The Swimsuit Issue Indicator says that the US equity markets perform better in years where an American appears on the cover of Sports Illustrated's annual issue as opposed to years when a non-American appears on the cover...Since 1978, an American has now appeared on the cover of the annual Sports Illustrated Swimsuit Issue in 17 different years. The average performance of the S&P 500 during those years is a gain of 10.7% with positive returns 82.4% of the time. Of the 16 years where no American appeared on the cover, the S&P 500 has averaged a gain of 8.2% with positive returns 75% of the time. To be sure, we would note that since the S&P 500's 38.5% decline in 2008 when an American appeared on the cover, the spread between years where an American appears on the cover versus non-Americans has narrowed considerably.
So what does a Russian model on the cover mean for Russia's equity market? Interestingly, going back to 1978 this is the first year that we have seen a Russian model on the cover of the issue, so there is no precedent. However, we would note that just two weeks ago we noted that while all the other BRICs were crumbling, Russia had been doing exceptionally. Coincidence?