Weekly Snippet

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April 12, 2019
Weekly Snippet

Last Week…

… Was a great week for U.S. Equities.

Everything was up anywhere from 0.5% to 3.5%.

  • Small Value had the largest gain over the previous week with Technology close behind.
  • Small Value seems to be bouncing back after being most trounced last year.

Remember that bouncing ball – asset classes that fall the hardest do tend to snap back the most on the upswing.  Like that bouncing ball, the harder you throw it down, the higher it tends to bounce back.

Looking at all U.S. equity returns, Small Value was hit the hardest in last year’s deep correction and has the lowest 1, 3, and 5 year trailing returns. But the ten year trailing return, where it counts the most for long term investors is nearly 15%!. And, although Large Value has the lowest 10 year, Small Value is only ahead by about 0.5%  That just means it has a little more room than the other U.S. equities to grow.

  • Commodities are having their best year since 2016. On this pace it could well the best year since 2011 and maybe since the great recession. There have only been 4 positive years in those eleven years for commodities.
  • Foreign Equities continue the upward trend, although they are not as up as U.S.
  • Bonds are still a mixed pot.

But for this last week High Yield and Emerging Market bonds inched up while the rest barely slipped down. The fact that most U.S. bonds slipped down indicates what?  That prices have been driven down which means the yield has gone up = no more inverted yield curve!

David wanted to share a fun fact:

Market analysts often point out that an inverted yield curve is a strong leading indicator of a downturn. So strong that it correctly predicted 9 of the last 7 recessions, right?

…if you are like some of us here at the office, you’re scratching your head right now. Huh? Predicted 9 of the last 7??  This simply means the yield curve has been WRONG before.  There were 2 recessions that “should” have happened if the yield curve were a perfect predictor of downturns.

And with that…good night! 😊

Have a great weekend!

Indexes are listed in respective order to their reference above: DJ Industrial Average TR USD, S&P 500 TR, DJ US TSM Large Cap Growth TR USD, NASDAQ 100, Technology NTTR TR USD, DJ US Health Care TR USD, DJ US TSM Large Cap Value TR USD, DJ US TSM Mid Cap Growth TR USD, DJ US TSM Mid Cap Value TR USD, DJ US TSM Small Cap Growth TR USD, DJ US TSM Small Cap Value TR USD, FTSE NAREIT All Equity REITs TR, DJ Gbl Ex US Select REIT TR USD, Bloomberg Commodity TR USD, MSCI EAFE NR USD, MSCI EAFE Growth NR USD, MSCI EAFE Value NR USD, MSCI EAFE Small Cap NR USD, MSCI EM NR USD, BBgBarc US Corporate High Yield TR USD, FTSE WGBI NonUSD USD, JPM EMBI Plus TR USD, BBgBarc US Govt 1-3 Yr TR USD, ICE BoafAML 1-3Y US Corp TR USD, BBgBarc Intermediate Treasury TR USD, BBgBarc Interm Corp TR, BBgBarc US Treasury US TIPS TR USD. These materials have been prepared solely for informational purposes based upon data generally available to the public from sources believed to be reliable. All performance references are to benchmark indexes. Performance of specific funds will vary from respective benchmarks. Past performance is not an assurance of future results. Each index cited is provided to illustrate market trends for various asset classes. It is not possible to invest directly in an index.