Mid-week market update: Instead of just focusing on the U.S. market, I offer these two mystery charts of EM markets. One is a contrarian play, the other a momentum play. Mystery charts revealed The top chart, the contrarian play, is MSCI China relative to MSCI All-Country World Index Ex-US. The latest BoA...
The June CPI and PPI reports both came in higher than expectations. The good news is core CPI is decelerating. The bad news is both core sticky price CPI and Owners' Equivalent Rent, which is about one-third of core CPI, are rising rapidly. These readings confirm the market's expectations that the Fed will continue...
After a number of discussions with readers, there appears to have been some misunderstanding over my recent post (see The bond market tempts FAIT). I did not mean to imply that the advance in bond prices is an intermediate-term move, only a tactical counter-trend rally. The decline in Treasury yields can be attributable to: The...
Recently, a growing narrative in the market is arguing for a pause in the reflation trade for the following reasons: Both the cyclically sensitive copper/gold and base metal/gold ratios have moved sideways. The 10-year Treasury yield peaked out in March and it is now falling, which is an indication of the bond market's belief...
It has been a week since Recep Erdoğan`s decision to fire Turkey`s central-bank governor, Naci Agbal, for raising interest rates. Both Turkey`s stock market and currency, the Turkish lira (TRY), have shown some signs of stabilization after a dramatic drop last Monday. However, TRY weakened today but the fall is likely attributable to the fears...
I recently made a presentation at a virtual conference, and an audience member asked me to name some of my favorite value sectors. I had a few answers, but let me start with what I would avoid, namely financial stocks. Financial stocks are statistically cheap and comprise a significant weight in most value...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. ...
Risk takers are fond of the line, "No guts, no glory". With that in mind, I present three cases of risks, and possible opportunities. The Turkey in the FX coalmine In late June, I highlighted analysis from Research Affiliates of country values by CAPE relative to their own history. At the top of the...
avFor several months, the BAML Fund Manager Survey shows that global institutions have been piling into emerging market equities. The purchase of EM equities has been a smart move, as they have been leading the market upwards. However, their time in a leadership role may be coming to an end owing to a series...
The latest BAML Fund Manager Survey shows that institutional managers have been piling into emerging market equities while avoiding the other major developed market regions. Indeed, there is good reasoning behind the bullish stampede. Callum Thomas showed a series of charts supportive of the EM equity bull case. For one, developed market M-PMIs...
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The...
Mid-week market update: Earlier in the week, Mark Hulbert wrote that "U.S. investors should see this Turkish crisis as a buying opportunity". Hulbert went on to cite the historical record of past currency crises: And it’s not just 20-20 hindsight for me to point this out now, with a strong bull market under our belts....
Preface: Explaining our market timing models We maintain several market timing models, each with differing time horizons. The "Ultimate Market Timing Model" is a long-term market timing model based on the research outlined in our post, Building the ultimate market timing model. This model tends to generate only a handful of signals each decade. The...
The study of emerging markets is a useful exercise in examining our assumptions about economies and markets because they sometimes operate by different rules than developed economies. As an example, Bloomberg reported today that the markets are freaking out over the firing of the finance minister: South African markets were thrown into turmoil after President Jacob...
