Archive | February, 2016

EM Stocks Are Just Plain Cheap

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Regardless of the valuation metric one chooses to look at it, the story is the same: EM stocks are cheap. EM stocks have fallen so far that 2009 valuation lows are starting to be challenged. Case in point, on a price to cash flow basis EM stocks are trading at lower multiple today than they were […]

Emotional Selling Has Nearly Tripled So Far This Year

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Down gaps (inverted, in blue) in developed world stocks have risen three-fold since the beginning of the year– indicating an increase in emotional selling the likes of which we have not seen since 2011: By region, we find that, while gaps have tripled in every case, DM Americas and DM Asia have seen the biggest […]

Guess Which is Not the Worst Performing Area of the Global Equity Market this Year?

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One major trend availing itself in the global equity markets may be surprising: the stark out-performance of emerging markets. We’ve started to write a bit here and there about the relative performance differentials availing themselves in what has undoubtedly been a turbulent year. The reason we’ve spent time on this subject is because often at important […]

Euro On the Move?

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Financial news outlets are abuzz with today’s sharp decline in the British Pound: And, indeed, a nearly 2% move is newsworthy. Taking a look at longer-term data, however, we find that the term ‘freefall’ might be a bit premature. Sterling’s tendency to move in concert with changes in the net commerical position of traders shows […]

Is A Stronger Euro and a Stronger Yen in Play?

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The nominal trade-weighted dollar index, against major currencies, is now just 4% higher year-over-year as the index has recently fallen from an approximately 13-year high of 95.6 to 92.4. The slow down in the rate of change is important since at one point in 2015 the nominal trade-weighted dollar index was increasing at a 22% year-over-year […]

Downtrend in European Consumer Confidence Drags Stocks With It

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Today’s worse than anticipated drop in the Eurozone’s flash consumer confidence indicator– from -6.3 last month to -8.8, compared to a consensus -6.7– caps off a week of relatively weak data from the European region that only seems to confirm the central bank’s growing concerns. Unfortunately for already downtrodden markets, the drop in confidence would […]

Inflation Inched Higher In January

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Add another surprising data point in the column “in favor of additional interest rates hikes” for the Federal Reserve. Earlier this week, we had a positive industrial production report (and more importantly an increase in manufacturing production and capacity utilization) and now we have a decent CPI print. Not that we are going wild over a single […]

Correlation Between Oil and Stocks Highest Ever Since 1980

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Stock prices and oil prices have been moving in a more positive correlated fashion recently than at any point since 1980. The 65-day correlation between Brent Crude Oil and MSCI World Index peaked at 52% on 11/13/2015 and has since fallen back a bit to 41%. The 200-day moving average is also at 41% and continues to climb higher. […]