– Risk assets rebounded sharply across the board, and Treasuries gave back some of recent gains.
– With less than a month to go in 2021, Large Growth takes the lead as the best performing style.
– Emerging markets rallied, but the performance was underwhelming.
– 6.8% inflation is pushing the Fed toward tighter policy, and rate increases will begin with the flattest yield curve in a generation.
– Monetary conditions and valuations drive Market Risk Index to 85.6%.
– Short-Term Sentiment improvement falls just shy of extreme pessimism.
– Inflation is becoming a more powerful foil to the Fed Put.
– All major asset classes declined on concerns of a new Covid variant. Treasuries rallied strongly on Black Friday.
– Energy stocks were the only safe haven as every other major sector and factor declined.
– Argentina led all international equity declines, correcting by more than 15% over the course of the week.
– Initial Jobless claims have plunged to the lowest level since 1969.
– Psychology composite hasn’t budged, but our Short-Term Sentiment Composite is approaching pessimism.
– Bond Momentum buy signal is working in our favor.
– Charlie Munger calls this market “even crazier than the dot-com era.”
%
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)
