“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

______________________________________________________________________________

Weekly Asset Allocation Review – Free

Weekly Equity Themes Review – Free

The Equity Observer (Monthly) – Subscription Required

The Asset Allocation Advisor (Monthly) – Subscription Required

“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

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