Thirty-year mortgage rates might have ticked up in the past 12 months, but for now that doesn’t seem to be weighing on new home demand. According to the Commerce Department, housing starts climbed to an 11-year high of 1.35 million units in May, a clear sign that the market has continued to improve following the subprime mortgage crisis a decade ago.
Index provider MSCI’s decision to include Saudi Arabia in its emerging-markets index will likely transform the Kingdom’s equity market, and potentially those across the Middle East and North Africa (MENA) region, according to Bassel Khatoun and Salah Shamma, Franklin Templeton Emerging Markets Equity.
Russ discusses why economic conditions (for now) support low volatility in the markets.
The Q Ratio is a popular method of estimating the fair value of the stock market developed by Nobel Laureate James Tobin. It's a fairly simple concept, but laborious to calculate. The Q Ratio is the total price of the market divided by the replacement cost of all its companies. This update includes the latest Z.1 data.
The last couple of years have been remarkable ones for yields. The 10-year note hit its historic closing low of 1.37% in July of 2016 and then rose 158 BPs to its interim high of 2.95% as of the June 15 close.
This memo covers three ways in which securities markets seem to be moving toward reducing the role of people: (a) index investing and other forms of passive investing, (b) quantitative and algorithmic investing, and © artificial intelligence and machine learning.
Four of eight indexes on our world watch list have posted gains through Monday, June 18, 2018. The top performer this year is India's BSE SENSEX with a gain of 5.13%. In second is our own S&P 500 with a gain of 3.75%. In third is France's CAC 40 with a gain of 2.60%. Coming in last is Shanghai's SSE with a loss of 8.63%.
Energy equities have underperformed the S&P 500 materially over the last five years. While spot oil prices have risen significantly over the last twelve months, longer dated oil prices have not, and energy equities have remained under pressure.
Small caps have materially outperformed large caps in 2018, with the S&P SmallCap 600 Index outpacing the S&P 500 Index 7.80% to 2.58% between Dec. 29, 2017, and May 25, 2018. Below, I highlight the drivers of small-cap returns this year, and why I believe the trend could continue.
We have used this quip from the book Why You Win or Lose: The Psychology of Speculation by Fred C. Kelly many times in our missives over the past nearly five decades because the wisdom of its message is timeless. We recalled it last week in many of our meetings in New York City when we heard certain individual investors, as well as portfolio managers (PMs), say “I should have!”