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Category Archives: Equity Strategies

Equity Market Highlights – Cold Showers Never Feel Good in March

https://gf-cap.com

“Is the market high only because of some irrational exuberance— wishful thinking on the part of investors that blinds us to the truth of our situation?” 
― Robert J. Shiller

►Equity markets have staged a remarkable recovery after a dismal Q4 but last week was a wake-up call

►Over the last month, US small and large caps have performed in line with each other but ahead of international equity strategies

►Over the last 12 months, US large cap equities are up slightly while US small cap and international still show losses

►Valuations are still a bit stretched in the US but growth and profitability are hanging in

►The key for equity markets is global growth and whether we are entering a slowdown or not

Countries & Region:

►A global recovery for equities was interrupted last week as growth concerns returned to the forefront

►Commodity indices were flat last week as oil prices firmed but agricultural markets headed south due to excess supply conditions

►In the US Value slightly under-performed  Growth last week, but the main style effect was size (the smaller the worse)

►In international markets Value under-performed Growth by a wider margin driven primarily by sector differences

►Globally, Energy, Financials and Health Care under-performed last week while interest-sensitive sectors such as Telecom and Utilities held their own


Style & Sector:

►In the US, we saw Small Caps do worse than large caps

►The size effect in the US was really strong last week

►Within equity styles, Quality, Yield, and Low Vol strategies delivered lower losses (lower beta)

►The Momentum has lost “mo” – momentum stocks have underperformed the general market this year

►International equities last week took a hard hit both in local currency as well as through currency losses

►On a YTD basis developed Europe has outperformed other international strategies


This Coming Week:

►The strength of the equity market recovery has been impressive especially among small caps

►We believe that a risk on/off market is likely this year

►Given the low levels of investor risk aversion we would expect a reversal in the near future

►Equity Technicals have deteriorated to the point that 35% of stocks remain in the Down Trend Phase

►Political drama in Washington is exacerbating the uncertainty of market participants but investors seem to be in denial thus far in 2019

►Brexit is up for the spring but prospects of passing Parliament are slim. Could we be starring at Referendum 2.0?

►Tariff wars are taking a bite with the IMF recently citing trade wars as the main reason for a cut in their forecast of global growth

►Our models still favor a reduction in risk in our portfolios with positive active allocations to cash and bonds

►The price of higher equity returns is discomfort – volatility has been too low in the last few years

►While Value is holding its own with Growth we still see the action at the sector level rather than in terms of pure valuation

To read our weekly report including style factor breakdowns please click  here

Eric J. Weigel

Global Focus Capital LLC

eweigel@gf-cap.com

______________________________________________________________________________

Weekly Asset Allocation Review – Free

Weekly Equity Themes Review – Free

The Equity Observer (Monthly) – Subscription Required

The Asset Allocation Advisor (Monthly) – Subscription Required

Equity Market Insights – Amazing Recovery But For How Long?

https://gf-cap.com

“Investing is not nearly as difficult as it looks. Successful investing involves doing a few things right and avoiding serious mistakes”

– Jack Bogle

►Equity markets have staged a remarkable recovery after a dismal Q4

►Over the last month, US small and large caps have performed the best

►Over the last 12 months, US equities are up slightly while International still show large losses

►Valuations are still stretched in the US but growth and profitability are hanging in

►The key for equity markets is global growth and whether we are entering a slowdown or not

Countries & Region:

►A global recovery for most but with large differences in global market performance

►Commodity indices continue their recovery as oil prices firmed up helping resource oriented markets

►In the US Value slightly outperformed  Growth last week, but the main style effect was size (the smaller the better)

►In international markets Value under-performed Growth by a wide margin driven primarily by sector differences

►Globally, Energy and Industrials performed best last week while interest-sensitive sectors such as Telecom and Utilities under-performed


Style & Sector:

►In the US, we saw Small Caps do best

►The size effect in the US was really strong last week

►Within equity styles, Quality strategies continue shinning

►The Momentum has lost all “mo” – momentum stocks have underperformed the general market

►Developed Europe rebounded strongly last week despite growth concerns

►Latam has vastly outperformed EM Asia – YTD it is up nearly double the EM index


This Coming Week:

►It’s been a huge surprise how strong equity markets have been this year especially in the US

►Equity Technicals have improved to the point that only 13% of stocks remain in the Down Trend Phase

►The strength of the stock price recovery has been so extreme that a quick reversal would not be out of the question

►Political drama in Washington is exacerbating the uncertainty of market participants but investors seem to be in denial thus far in 2019

►Brexit is up for the spring but prospects of passing Parliament are slim. Could we be starring at Referendum 2.0?

►Tariff wars are taking a bite with the IMF recently citing trade wars as the main reason for a cut in their forecast of global growth

►Our models still favor a reduction in risk in our portfolios with positive active allocations to cash and bonds

►The price of higher equity returns is discomfort – volatility has been too low in the last few years

►This coming week has huge earnings implications. Lots of companies reporting Q4.

►While Value is holding its own with Growth we still see the action at the sector level rather than in terms of pure valuation

To read our weekly report including style factor breakdowns please click  here

Eric J. Weigel

Global Focus Capital LLC

eweigel@gf-cap.com

______________________________________________________________________________

Weekly Asset Allocation Review – Free

Weekly Equity Themes Review – Free

The Equity Observer (Monthly) – Subscription Required

The Asset Allocation Advisor (Monthly) – Subscription Required

Equity Market Insights – The Beat Goes On For Equity Investors

https://gf-cap.com

“Investing is not nearly as difficult as it looks. Successful investing involves doing a few things right and avoiding serious mistakes”

– Jack Bogle

►Equity markets have staged a remarkable recovery after a dismal Q4

►Over the last month, US small caps and EM stocks have performed the best

►Over the last 12 months all major equity asset classes are down with US Large Cap the least and EM the most

►Valuations while more reasonable than 3 months ago are not yet favorable – we may be seeing a reversal from the q4 downdraft, not a fundamental uptrend

►The key for equity markets is global growth and whether we are entering a slowdown or not

Countries & Region:

►A global recovery for most but with large differences in global market performance

►Commodity indices continue their recovery as oil prices firmed up helping resource oriented markets

►In the US Value and Growth performed in line last week, but higher dividend yield stocks really rocked it

►In international markets Value under-performed Growth by a wide margin driven primarily by sector differences

►Globally, Staples and Energy performed best last week while Financials gave back some of the gains from the previous week


Style & Sector:

►In the US, we saw Large Caps  do best

►The size effect in the US was strong (in reverse of expectations)

►Within equity styles, Dividend Yield and Quality strategies resulted in better performance

►The Momentum trade has made a bit of a comeback in 2019 – it’s up 7% YTD

►Latam shot up last week – the index is up 14.7% for the year


This Coming Week:

►Risk Aversion should spring up this week with more earnings in the US

►Equity Technicals have improved to the point that only 13% of stocks remain in the Down Trend Phase

►Political drama in Washington is exacerbating the uncertainty of market participants but investors seem to be in denial thus far in 2019

►Brexit is up for the spring but prospects of passing Parliament are slim. Could we be starring at Referendum 2.0?

►Tariff wars are taking a bite with the IMF recently citing trade wars as the main reason for a cut in their forecast of global growth

►Small caps are the best performing major asset class in 2019 after a dismal 2018 – some of it is due to a snap back but we are still underweight small caps

►Surprisingly EM equities have outperformed developed markets in the last month. 

►Our models still favor a reduction in risk in our portfolios with positive active allocations to cash and bonds

►The price of higher equity returns is discomfort – volatility has been too low in the last few years

►This coming week has huge earnings implications. Lots of companies reporting Q4.

To read our weekly report including style factor breakdowns please click  here

Eric J. Weigel

Global Focus Capital LLC

eweigel@gf-cap.com

______________________________________________________________________________

Weekly Asset Allocation Review – Free

Weekly Equity Themes Review – Free

The Equity Observer (Monthly) – Subscription Required

The Asset Allocation Advisor (Monthly) – Subscription Required

Equity Market Insights – Global Risk Assets Shoot Up Despite Underlying Tension

https://gf-cap.com

 

“Investing is not nearly as difficult as it looks. Successful investing involves doing a few things right and avoiding serious mistakes”

– Jack Bogle

►The seesaw continues for risky assets as small caps take the lead for 2019 but investors feel the tension

►Over the last month, US small caps and EM stocks have made money

►Over the last 12 months, all major equity asset classes are down with US Large Cap the least and EM the most

►Valuations while more reasonable than 3 months ago are not yet favorable – we may be seeing a reversal from the q4 downdraft, not a fundamental uptrend

►The key for equity markets is global growth and whether we are entering a slowdown or not

Countries & Region:

►A global recovery but with large differences in global market performance

►Commodity indices continue their recovery as oil prices firmed up helping resource oriented markets

►In the US Value outperformed Growth last week – higher dividend yield underperformed but the sector effect was dominant as was the quality factor

►In international markets Value out-performed Growth by a smaller margin than in the US

►Financials performed best and Utilities did the worst (barely positive)


Style & Sector:

►In the US, we saw Midcaps do best followed by large caps

►Value performed a bit better than Growth

►Within equity styles, Quality strategies resulted in better performance

►The Momentum trade has made a bit of a comeback in 2019 but the effect is still uncertain

►EM Asia and Latam shot up last week recovering from poor 2018 performance

 


This Coming Week:

►Risk Aversion should spring up this week unless China and the US reach a deal on tariffs

►Equity Technicals have improved to the point that only 17% of stocks remain in the Down Trend Phase

►Political drama in Washington is exacerbating the uncertainty of market participants but investors seem to be in denial thus far in 2019

►Brexit is up for the spring but prospects of passing Parliament are slim. Could we be starring at Referendum 2.0?

►Tariff wars are taking a bite with the IMF recently citing trade wars as the main reason for a cut in their forecast of global growth

►Small caps have massively underperformed large caps over the last 3 months but have had a nice a nice recovery in 2019

►Surprisingly EM equities have outperformed developed markets in the last month. 

►Our models still favor a reduction in risk in our portfolios with positive active allocations to cash and bonds

►The price of higher equity returns is discomfort – volatility has been too low in the last few years

►This coming week has huge earnings implications. Lots of companies reporting Q4.


To read our weekly report including style factor breakdowns please click  here

Eric J. Weigel

Global Focus Capital LLC

eweigel@gf-cap.com

______________________________________________________________________________

 

Global Focus Capital

Weekly Asset Allocation Review – Free

Weekly Equity Themes Review – Free

The Equity Observer (Monthly) – Subscription Required

The Asset Allocation Advisor (Monthly) – Subscription Required

Equity Market Insights -A well-behaved market that will not last

https://gf-cap.com

 

Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected

– George Soros

  • The seesaw continues for risky assets as small caps take the lead for 2019
  • Over the last month, all major equity categories have lost money
  • Surprisingly, EM stocks have held up the best in this equity correction
  • Valuations while more reasonable than 3 months ago are not that favourable
  • The key for equity markets is growth and whether we are entering a slowdown or not

Countries & Region:

  • A global recovery but with large differences in global market performance
  • Commodity indices recovered last week as oil prices firmed up helping resource oriented markets
  • In the US Value slightly outperformed Growth last week – higher quality and dividend yield also made a difference
  • In international markets Value out-performed Growth by a wider margin than in the US
    • Energy performed best and Tech did the worst (Apple effect)

Style & Sector:

  • In the US, we saw a strong size effect last week with small caps dramatically out-performing
  • Value performed a bit better than Growth
  • Within equity styles, Quality and Div Yield strategies resulted in better performance
  • The Momentum trade has gone in reverse with last year’s biggest loser performing the best thus far in 2019
  • Latam shot up last week recovering from poor 2018 performance and the rise in oil prices

This Coming Week:

  • Risk Aversion should stay high and we expect choppy markets this coming week again
  • Equity Technicals have deteriorated to the point that close to 65% of stocks in the Down Trend Phase
  • Political drama in Washington is exacerbating the uncertainty of market participants
  • Brexit is up for the spring but prospects of passing Parliament are slim. Could we be staring at Referendum 2.0?
  • Tariff wars are taking a bite with the IMF recently citing trade wars as the main reason for a cut in their forecast of global growth
  • Small caps have massively under-performed large caps over the last 3 months but had a nice recovery
  • Surprisingly EM equities have outperformed developed markets in the last month.
  • Our models still favor a reduction in risk in our portfolios with positive active allocations to cash and bonds
  • This too shall pass but market participants are hyper nervous on things companies have no control over
  • The price of higher equity returns is discomfort – volatility has been too low in the last few years

To read our weekly report including style factor breakdowns please click  here

Eric J. Weigel

Global Focus Capital LLC

eweigel@gf-cap.com

______________________________________________________________________________

 

Global Focus Capital
Global Focus Capital
Global Focus Capital
Global Focus Capital

Weekly Asset Allocation Review – Free

Weekly Equity Themes Review – Free

The Equity Observer (Monthly) – Subscription Required

The Asset Allocation Advisor (Monthly) – Subscription Required

Equity Market Insights – Paralyzed by Fear

https://gf-cap.com

“Everything you’ve ever wanted is on the other side of fear”

– Jack Canfield

  • The seesaw continues for risky assets –a punch in the nose
  • Last week was particularly bad as equity markets took a deep dive again
  • Surprisingly, EM stocks have lost the least over the last month but YTD remain the worst of the major equity categories
  • YTD US large caps are now in negative territory
  • International strategies have underperformed both in local market returns and a strong USD

Countries & Region:

  • The carnage continues –all major global markets took a nosedive with the US suffering the most
  • Commodity indices took another down leg last week as oil prices dropped again (-13%)
  • REITS are now down 2% for the year after a brutal -5.8% week
  • In the US Value and Growth both got pounded last week with Value outperforming by 1%
  • In international markets Growth under-performed Value last week by 50 bp.
  • Tech and Energy got hit the hardest last week

Style & Sector:

  • In the US, we saw a strong size effect last week with small caps dramatically under-performing
  • Value performed almost as badly as Growth
  • Within equity styles, Low Vol and Div Yield strategies resulted in smaller losses
  • The Momentum trade has gone in reverse
  • Emerging markets outperformed Developed international markets but remain still 15.5% down for the year

This Coming Week

  • Risk Aversion should stay high and we expect choppy markets this coming week again
  • Equity Technicals have deteriorated to the point that close to ¾ of our stocks are in the Down Trend Phase
  • Political drama in Washington is exacerbating the uncertainty of market participants
  • Brexit is up for next year but prospects of passing Parliament are slim. Could we be staring at Referendum 2.0?
  • Tariff wars are taking a bite with the IMF recently citing trade wars as the main reason for a cut in their forecast of global growth
  • Small caps have massively under-performed large caps over the last 3 months – risk is being shunned at the moment
  • Surprisingly EM equities have outperformed developed markets in the last month.
  • Our models still favor a reduction in risk in our portfolios with positive active allocations to cash and bonds
  • This too shall pass but market participants are hyper nervous on things companies have no control over
  • The price of higher equity returns is discomfort – volatility has been too low in the last few years

To read our weekly report including style factor breakdowns please click  here

Eric J. Weigel

Global Focus Capital LLC

eweigel@gf-cap.com

___________________________________________________________________________________

Publications:

Weekly Asset Allocation Review – Free

Weekly Equity Themes Review – Free

The Equity Observer (Monthly) – Subscription Required

The Asset Allocation Advisor (Monthly) – Subscription Required

Major Equity Markets

Equity Market Insights – Utilities Shine While Everything Else Gets Destroyed

Utilities are the new cool kids on the block

    • The seesaw continues for risky assets but utilities emerge as the standout performer
    • Last week was particularly bad as equity markets took a deep dive again
    • Surprisingly, EM stocks are up over the last month but YTD remain the worst of the major equity categories
    • YTD US large caps are barely in positive territory but US small caps are now down for the year
      • The S&P 500 is up 0.3% for the year while the Russell 2000 is down 4.6%
      • International strategies have underperformed both in local market returns and a strong USD

Countries & Region:

  • The carnage continues –all major global markets took a nosedive with Germany suffering the most
  • Commodity indices recovered last week as oil prices moved marginally up
  • REITS continue to be the standout performer – up 1.6% last week and over 6% for the year
  • In the US Value and Growth both got pounded last week (down 3.8%)
  • In international markets, Growth outperformed Value last week
    • Utilities continue delivering – only equity sector up last week

 

Style & Sector:

  • In the US, we saw a strong size effect last week with small caps dramatically under-performing
  • Value performed as badly as Growth despite Utilities being up for the week
  • Within equity styles, Low Vol and Div Yield strategies resulted in smaller losses
  • The Momentum trade has gone in reverse and Growth Stocks are key losers but remain ahead YTD
  • Emerging markets outperformed Developed international markets but remain still 13% down for the year
  • EM LATAM continues extremely volatile and was down 2% last week

This Coming Week:

  • Risk Aversion should stay high and we expect choppy markets this coming week again
  • Equity Technicals have deteriorated to the point that over half of our US universe in is a Down Trend Phase
  • The exception are Utilities where 68% of our stocks are in an Up Trend
  • The political drama in Washington is exacerbating the uncertainty of market participants
  • Brexit is up this week – will the Parliament vote for it?
  • Tariff wars are taking a bite with the IMF recently citing trade wars as the main reason for a cut in their forecast of global growth
  • Small caps have massively underperformed large caps over the last 3 months – risk is being shunned at the moment
  • Surprisingly EM equities have outperformed developed markets in the last month.
  • REITS have performed extremely well and are YTD our best performing asset class
  • Our models still favor a reduction in risk in our portfolios with positive active allocations to cash and bonds

To read our weekly report including style factor breakdowns please click  here

Eric J. Weigel

Global Focus Capital LLC

eweigel@gf-cap.com

___________________________________________________________________________________

 

Publications:

Weekly Asset Allocation Review – Free

Weekly Equity Themes Review – Free

The Equity Observer (Monthly) – Subscription Required

The Asset Allocation Advisor (Monthly) – Subscription Required

 

Equity Market Highlights – Momentum and Growth Get Mauled

Growth loses its edge as Momentum reverses

  • The last month has been brutal for equity investors
    • Higher rates contributed to this as well as slower expected global growth due to an escalation of tariffs
    • Surprisingly, EM stocks are up over the last month but YTD remain the worst of the major equity categories
  • YTD US large caps are barely in positive territory but US small caps are now down for the year
    • The S&P 500 is up 0.2% for the year while the Russell 2000 is down 2%
    • International strategies have underperformed both in local market returns and a strong USD

Countries & Region:

  • The carnage continues –US growth stocks took a huge pounding last week
  • Commodity indices took a beating last week (due to oil primarily) while the Real Estate market kept recovering
  • In the US Value out-performed Growth over the last 5 trading by over 130 bp
  • In international markets Value and Growth performed in line with each other
    • Traditional Value sectors such as Utilities and Staples outperformed along with Health Care
  • Technology and Energy were the two largest losers last week

Style & Sector:

  • In the US, we saw a strong size effect last week with mega-caps under-performing
  • Value once again out-performed Growth as the Utilities, Health Care and Real Estate performed well
  • The Momentum trade has gone in reverse and Growth Stocks are key losers but remain ahead YTD
  • Developed international markets were down the least last week but remain down 10% for the year

This Coming Week:

  • Risk Aversion should stay high and we expect choppy markets this coming week again
  • Equity Technicals have deteriorated to the point that over half of our US universe in is a Down Trend Phase
  • Tax loss selling is likely to intensify in the next few weeks
  • Tariff wars are taking a bite with the IMF recently citing trade wars as the main reason for a cut in their forecast of global growth
  • Small caps have massively under-performed large caps over the last 3 months – risk is being shunned at the moment
  • Surprisingly EM equities have outperformed developed markets in the last month.
  • REITS have performed extremely well and are YTD our best performing asset class
  • Q3 reporting is heavy in the US – looking for commentary on tariffs, slowing growth, and inflationary pressures

To read our weekly report including style factor breakdowns please click  here

Eric J. Weigel

Global Focus Capital LLC

eweigel@gf-cap.com

___________________________________________________________________________________

 

Publications:

Weekly Asset Allocation Review – Free

Weekly Equity Themes Review – Free

The Equity Observer (Monthly) – Subscription Required

The Asset Allocation Advisor (Monthly) – Subscription Required

 

Equity Market Insights – Strong Signs of Sector and Style Rotation

It’s Happening- Signs of Sector and Style Rotation

  • Value sectors are gaining momentum while Growth sectors such as Tech is losing steam quickly
  • Similarly, strategies such as low volatility are gaining ground at the expense of pure momentum strategies
  • The last month has been brutal for equity investors but some signs of stability have emerged
    • Higher rates contributed to this as well as slower expected global growth due to an escalation of tariffs
  • YTD US large and small caps are in positive territory
    • The S&P 500 is up 5.7% for the year while the Russell 2000 is up a meager 1.9%
    • International strategies have underperformed due both to local market returns and a strong USD

Countries & Region:

  • The carnage continues among Chinese stocks
  • Commodity indices took a beating last week (due to oil primarily) while the Real Estate market kept recovering
  • In the US Value out-performed Value over the last 5 trading by over 40 bp
  • In international markets Value outperformed Growth by 90 bp
    • Traditional Value sectors such as Utilities and Staples outperformed along with Health Care
  • Health Care and Technology are the two best sectors YTD but Tech has been losing momentum

 

Style & Sector:

  • In the US, we saw a strong size effect last week with mega-caps outperforming
  • Value once again out-performed Growth as the Utilities, Health Care and Real Estate performed well
  • Growth and Momentum keep dominating YTD among US stocks but the lead is shrinking
  • Developed international markets were flat last week but EM equities took yet another hit
  • EM LATAM continues extremely volatile and driven by politics

This Coming Week:

  • Risk Aversion should stay high and we expect choppy markets this coming week again
  • Equity Technicals have deteriorated but have recovered from the ugliness of prior weeks
  • Tax loss selling is likely to intensify in the next few weeks
  • Tariff wars are taking a bite with the IMF recently citing trade wars as the main reason for a cut in their forecast of global growth
  • Small caps have massively under-performed large caps over the last 3 months – risk is being shunned at the moment
  • Will EM equities recover? Seems to be all about the direction of the US dollar at the moment. Pretty beat up despite stronger fundamentals
  • REITS have performed extremely well and are YTD only slightly behind US equities
  • Q3 reporting is heavy in the US – looking for commentary on tariffs, slowing growth and inflationary pressures

To read our weekly report including style factor breakdowns please click  here

Eric J. Weigel

Global Focus Capital LLC

eweigel@gf-cap.com

___________________________________________________________________________________

 

Publications:

Weekly Asset Allocation Review – Free

Weekly Equity Themes Review – Free

The Equity Observer (Monthly) – Subscription Required

The Asset Allocation Advisor (Monthly) – Subscription Required

 

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