– Commodities lead all asset classes ytd as January ends. A big down week for US equities took away the gains for the month.
– Small cap stocks are off to a strong start in 2020, while large cap stocks finished the month in the red.
– Emerging markets are leading and positive ytd. Developed equities finished the month with a negative return.
– In spite of all the GameStop news and volatility in equity markets, there was little concern in the bond market or the US dollar.
– Market Risk Index climbs to 93.9%, breaching the Jan-Feb 2020 peak.
– Valuation composite sets a new high watermark.
– Commodities were the only asset class to see a week over week decline. International equities lead all asset classes early in 2021.
– The broad advances among sectors that we saw in December have faded. Instead, each wk of Jan has been a tug of war among key sectors.
– Asian stocks, up 6.9%, are largely responsible for the out performance of international equities ytd.
– Bitcoin fell nearly 10% last week and is more than 20% off its January highs. Oil was down slightly, weighing down the broad commodity indices.
– Model recommends decreasing equity exposure by 10%, as the Market Risk Index climbs to 92.9% on a jump in the Monetary composite risk score.
– Still no signs of a let-up in speculative behavior.
– Valuations on small and mid-cap stocks have driven return expectations below zero.
%
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)
