Weekly Equity Market Highlights

Global equities under-performed bonds by a wide margin over the last 5 trading days
EM equities, in particular, are taking a huge hit – down almost 6% in the last 5 days
We rate EM equities as having the best long-term prospects but yikes, this hurts
Chinese stocks are imploding – is this all about a trade war or more significant trade issues?
Year-to-date US equities are vastly out-performing international assets – strong home bias plus an appreciating US dollar
Earnings season in the US is almost over – a good season was had by most
Value lost less than Growth in the US last week – is that out-performance?
Low volatility and high yield had gained last week but value indices were down

Countries & Region:

Tough week all around with the US losing the least
EM equities have been on a downward trend this year and it got worse this week with the index down 5.3%
China’s equity market continues to be very volatile. Trade war jitters have had a much larger effect on Chinese stocks – stocks were down over 6% in the last 5 days
Global sectors had losses except for Utilities and Staples – a tough week overall
Energy stocks keep getting whipsawed by the commodity

In the US, low vol and dividend yield were winners over the last 5 trading days
The “Value” comeback seems highly dependent on the path of interest rates
- When people worry about rising rates “value” stocks take a hit, when they don’t they do well
Momentum took a hit last week – this style is quickly losing steam but still remains top dog for 2018
EM and International Developed equities continue their down trend
A big factor in relative performance rankings is the direction of the US dollar

Risk Aversion – expect the RAI to jump into the Neutral Zone
- Investors keep under-pricing risk
Will value only outperform growth when interest rates in the US drop?
- Will EM equities recover? The Turkey currency crisis merits some attention. Watch out for contagion effects
Are Chinese equities going to implode or is this temporary? Is the down trend due to tariffs or domestic growth issues?

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

Eric J. Weigel

Global Focus Capital LLC

eweigel@gf-cap.com

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