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

Style & Sector:

• 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

This Coming Week:

• 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

___________________________________________________________________________________

Publications:

Weekly Asset Allocation Review – Free

Weekly Equity Themes Review – Free

The Equity Observer (Monthly) – Subscription Required

The Asset Allocation Advisor (Monthly) – Subscription Required

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

Style & Sector:

• 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

This Coming Week:

• 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

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