We had a big bounce in cyclical sectors last week in the MSCI World Index. On an equal-weighted basis, the energy sector outperformed the MSCI World Index by over 6% last week. The second best performing sector was financials (+3.12%) and the the third best performing sector was materials (+2.78%).
Equity volatility looks like it made a low last fall. The 20-day moving average of the standard deviation of daily price changes for the MSCI World Index made a low on September 18th, 2014. Since that day, the average standard deviation for the MSCI World Index has increased by over 80%.
The drop in oil prices has brought up a few questions with respect to who will benefit and who will be negatively impacted. There are regional PMI surveys and Federal Reserve surveys that can help fill in some of the gaps. For example, below is the Dallas Fed New Orders index and the Houston PMI.
Recent US economic data has been disappointing. While perhaps statistical noise, more weak signs continue to mount. Let’s start with the durable goods orders reported recently. The headline stat is a very volatile series because aircraft and/or military orders can be quite lumpy.
Last week we wrote a few posts here, here and here noting the significant deterioration in EPS and sales growth estimates over the last few months.
To say that Greek banks are underperforming is more than a gross understatement of fact. The visual representation of that performance, however, is really quite stunning.
Imagine you had a plain vanilla $1 million equity portfolio that was solely invested in the S&P 500 and you were starting to feel a little nervous about stocks because of high valuations or deteriorating earnings estimates. How would you go about protecting yourself if stocks began to decline in earnest?
Markit’s PMI Manufacturing survey data released today showed little change in euro area countries’ headline readings, as most continued to hover around the all-important 50 level: The largest monthly improvement was in France (~2 points) while Ireland’s survey fell the most (~2 points), and no country came close to the three-point move posted by Austria
The average stock in the MSCI World Index fell by 1.2% in January. 11 of the 24 industry groups had positive price performance, led by pharmaceuticals, biotechnology & life sciences by a wide margin (5.1%). Food, beverage and tobacco (3%) and real estate (2.8%) were the second and third best performing groups.
Our basic proxy for global inflation continues to fall further. The year-over-year change of the CPI of 33 countries (using a simple average) has fallen for eight straight months and now sits at just 1.42%.