It is somewhat hard to believe but oil prices are up nearly 90% over the past year. The past two times oil prices have increased this much year-over-year, US 10-year bonds rallied quite significantly. In 2008, oil was up over 100% in July and bond yields were hovering just over 4%.
The latest Commitment of Traders report (as of last Friday) highlights some extreme levels of speculation in several different assets.
The latest NFIB Small Business Survey was a blow out report if there ever was one. Small business optimism increased to 105.8 in December from 98.4 in November and well above expectations of 99.5.
‘Quality’ is one of the those terms in finance that if you ask three different investors to define you get four different answers.
Over the last month, the average European bank has outperformed the broad developed market by about 7%, with more than half of them registering double-digit relative outperformance.
For the past couple of months, and especially since the US presidential election, US financial stocks have been on a great run. On an equal-weighted basis, US mid and large cap financial stocks are up a scorching 16.7% over the past 50 days.
At least since 2003 (which is when our data on TIPS begins), the dollar and breakeven inflation expectations have had a negative relationship. Said differently, when the dollar strengthens (as it has done recently) inflation expectations tend to fall and vice versa.
Since the U.S. election, small cap stocks (blue line) have advanced more than twice as much as large cap names (red line) and have more recently been consolidating gains after a very strong one month surge.
The December Conference Board Consumer Confidence survey had some interesting results. One of the more noteworthy changes were in regards to equity price expectations.
Most of the time not a whole lot actually changes in the markets over the course of a month. For example, small cap stocks tend to outperform large cap stocks by a rather mundane 31 bps over the course of a month on average going back to 1996.