China is in focus this week as the economics team considers the country’s trade practices and defaults in its bond market.
On Wall Street, it's best not to think too hard or to look too closely into the mouths of gift horses. Since making predictions based on actual economic understanding is rare, analysts typically look to provide explanations after the fact. Within the financial services industry, currency traders are perhaps the greatest practitioners of this craft. While they often get the fundamentals completely wrong, it never seems to stop them from offering bizarre theories to explain currency movements.
We’re a little more than a week into the 2018 FIFA World Cup, and so far Russia has surprised experts and fans alike. Expectations were low at best. Because of recent setbacks, including a disastrous performance at the 2016 UEFA European Championship and injuries sustained by key players, the federation ranked a dismal 66th place among Fédération Internationale de Football Association teams—its lowest position ever. The only reason it didn’t have to qualify to compete was because Russia is the host nation. (This is the first time in its 88-year history, by the way, that the World Cup has been held in Eastern Europe.)
The S&P 500 was a bit of a rollercoaster this week with three days of losses and two days of gains. The index was up 0.19% from Thursday but is down 0.88% from last week. The index is up 2.19% YTD and is 4.11% below its record close.
This morning's release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) at 150.1, up 0.9 from the previous week. Year-over-year the four-week moving average of the indicator is now at 3.71%, up from 3.36% last week. The WLI Growth indicator is now at 3.1, also up from the previous week.
This business expansion has gone on for nine years and most investors think we have to be near the end. In baseball parlance you hear talk that we are in the seventh or eighth inning; nobody seems to believe we are in the second or third. Jamie Dimon of J.P. Morgan has said at a conference we’re in the sixth, which got a lot of attention.
Matthews Asia CIO Robert Horrocks says worries about U.S. monetary policy are not without cause.
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.
PIMCO’s Global Advisory Board discusses the outlook for major economies and geopolitical developments.