– Global equities declined, while both Treasuries and commodities edged higher. REITs had it the worst, falling more than 2%.
– In a week of mostly declines, the Energy sector, midcaps, and small caps were standouts for managing to finish the week in positive territory.
– The median country return was flat. Developed markets declined slightly, but Emerging markets were up. China declined again this week.
– 20Yr Treasury prices were up more than 2%, as the US dollar managed to buck recent trends and close higher.
Archive
Market Outlook – 2020 is the Dot-Com Era’s Easy Money Cousin
– Hallmarks of euphoria are all around.
– The average first day pop in IPOs for the month of December is nearly 100%, a double. The last time that happened was February 2000.
– Small money option traders made up more of the total call option volume than ever before – well beyond the 2000 record.
– Ignoring signs of euphoria, stock market breadth has been superb.
World Wrap
– Stocks and REITs rallied while Commodities and Treasuries declined.
– Energy led all sectors for the week, and Utilities crossed into negative ytd return territory. Small Cap Value has gone positive for the year.
– Emerging markets had a strong week, despite a nearly 2% decline in Chinese equities.
– US Dollar declines have accelerated since December began, and gold has finally managed to rally after several losing weeks.
Market Outlook – The Unreported Covid Side Effect – Animal Spirits
– Sentiment and valuations have the dot-com era firmly in the crosshairs.
– The Fed doesn’t make vaccines, so it made the only elixir in its book of financial alchemy – animal spirits.
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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%
- Monetary 87.2%
- Valuation 99.3%
- Market Trend 9.8%