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World Wrap

World Wrap

– US equities rallied and regained the asset class lead. International equities are down ytd, and commodities are down by more than 8%.
– Large Growth is up 6.1% while Small Value is down 3.4%. There’s only one other year with a wider gap between the two styles this early in the year – 2009.
– Trump to release $4.8 trillion 2021 budget with proposed cuts to social-safety net programs & foreign aid and boosts for defense & veterans.
– Fed reported that consumer credit card borrowing surged by $12.6 billion in December, the largest one month increase since April 1998.

World Wrap

World Wrap

– January draws to a close with only US Treasuries and REITs firmly in positive ytd territory. Commodities were down over 8% for the month.
– Large Growth, momentum, and low vol are the leading style/factors, with lots of overlap. In other words, the big growth stocks have the most momentum and lowest vol.
– China’s stock market is getting hit, as coronavirus has effectively closed the country for business from the rest of the world.
– 20Yr Treasuries are up more than 7% ytd, beating even Tech stocks, as bonds begin to price in more rate cuts. Segments of the yield curve have inverted again.

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Market Risk Index

Market Risk Index scales from 0 to 100%. Higher readings correspond with higher risk markets. Scores below 25% are bullish. Scores between 25-75% are neutral, and scores above 75% are markets vulnerable to major drawdowns.

Model Category Readings (Percentiles)

  • Psychology 99.7% 99.7%
  • Monetary 87.2% 87.2%
  • Valuation 99.3% 99.3%
  • Market Trend 9.8% 9.8%