Weekly Equity Market Highlights

Global equities outperformed bonds by a wide margin over the last 5 trading days
Where is the Bear? We know it is lurking behind the scenes but conditions still favor equities over bonds
Emerging market equities were the best-performing equity sub-asset class – a reversal from some dismal prior weeks
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
Growth keeps outperforming value but most of the real action is at the sector level and highly dependant on the interest rate environment
China’s equity market continues to be very volatile – Trade war jitters have had a much larger effect on Chinese stocks

Countries & Region:

Large caps dominated in the last week with the S&P 500 up 1%
EM equities have been on a downtrend this year but last week was up 1.1% – part of it was currency related
China’s equity market continues to be very volatile. Trade war jitters have had a much larger effect on Chinese stocks
Telecom had a nice recovery last week with the global sector index up 2.7% – people continue searching for yield
Tech resumed its upward march while Energy stocks keep getting whipsawed by the commodity

In the US, momentum and growth keep leaping ahead
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
Size or market cap behaved perversely – the larger the cap the better the performance
EM equities out-performed last week with Asia doing particularly well
LATAM gave back some of the gains from last week
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
Market Internals – expected to remain “balanced” -the technicals do not support a bear market
Will growth keep outperforming value? Much depends on the direction of interest rates
Will EM equities recover? The Turkey currency crisis merits some attention. Watch out for contagion effects
More tariffs on the horizon? Will US stocks react to this? Most of the effect thus far has been on non-US stocks

Eric J. Weigel

Global Focus Capital LLC

eweigel@gf-cap.com

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