– It was a good week for international equities and commodities but a bad one for bonds and rate sensitive stocks and sectors.
– Beaten down value stocks, Energy and Financial sectors had strong rallies.
– Like the US, the international rally broadened last week with several of the lagging countries seeing a sizeable bounce.
– Lumber prices jumped another 12% last week – they have doubled over the last year.
– Market Risk Index climbs to 88.2%. Psychology, monetary, and valuation all worsened.
– The daily point totals on our Psychology composite are hitting euphoric extremes. It’s one of those times to pay attention.
– Investment pros grew more bullish, and our short-term Sentiment composite is also back into euphoria territory.-
– Forward PE ratio is less than 10% away from the 2000 dotcom peak.
– …and our favorite charts of the week.
– The first pure “risk-on” week in quite some time, as all risk assets moved higher while Treasuries declined.
– Value stocks had the edge, but last week was generally a good one for all styles and factors.
– On Sunday, New Zealand marked 100 days without a single case of local transmission of coronavirus. It is the 4th best performing country in the world.
– Commodities rallied, but notably Dr. Copper bucked the trend and declined with a large drop on Friday.
– Market Risk climbs to 85.4% on worsening investor psychology.
– Bankers are as nervous as they were in the GFC.
– Investors embracing still embracing options and levered ETFs.
– NASDAQ to NYSE Volume sentiment sets 40yr record, just as Apple breaks IBM’s 40yr record for largest weight in the S&P 500.
– Sharply falling yields boost monetary conditions, but the dollar’s action here is most important.
– Both Median and cap-weighted PEs climb above 22X for the first time.
– And, lots of charts.
%
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)
