Volatility, as measured by the standard deviation of the the daily percent change in stock prices, has fallen since the beginning of the year in the MSCI World Index. The one month moving average of volatility has dropped to 0.54 from a high 0.86 on January 23rd.
Read MoreIt’s no secret that growth estimates for companies all over the world have been weak recently. We’re written about the topic here and here in just the last week. What remains striking, though, is that six years into a recovery top and bottom line growth expectations remain weak.
Read MoreThe odds of a Eurozone break-up remained unchanged at 38% in the most recent Sentix survey, conducted over the last three days of February– a level not seen consistently since 2012 and up considerably from last July’s 7% reading.
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This year, especially in February, there has been something of a cyclical bounce in the developed country stock markets. Since the beginning of the year, counter-cyclical stocks have underperformed cyclical stocks by 75 basis points in the MSCI World Index.
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Regular readers will know that we often measure the influence of certain fundamental and macrofactors on stocks. The way we do this is to measure the correlation between the factor in question (with the individual readings broken into deciles) and the market performance over various time periods.
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The heatlhcare sector has been the leadership group over the last five years in all geographies of the MSCI World Index. The most well known industries within the healthcare sector are the biotech and pharmaceutical industry.
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Unsurprisingly, the cost of insurance against Greek default (as evidenced by 10-year credit default swaps) has risen since the beginning of the year.
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It’s gone somewhat under the radar that the MSCI World Index is now sitting at a new all-time high. That is usually a good sign for the market, especially when accompanied by improving market breadth.
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We track analyst estimates in a variety of ways. We look at growth rate expectations over the next four years. We also measure the percent change in the level of USD estimates across various time frames. We also track the difference in growth rates now versus three months ago.
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Savvy investors know that its not always the stocks that you own that make you a good investor but many times it’s the stocks that you successfully avoid.
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Over the last several weeks, there has been a subtle change in the factors that have contributed most to performance trends for the MSCI World universe.
Read MoreWe have had a bit of cyclical bounce over the past month in the developed stock markets. Late cyclical sectors (energy, materials, industrials) are three of the top four performing sectors and the other top performing sector is an early cyclical sector (consumer discretionary).
Read MoreWe divide stocks in all ten economic sectors into four basic, equal weighted baskets:1) Early Cyclicals: These are consumer discretionary companies.2) Hyper Cyclicals: These are financial and technology companies.3) Late Cyclicals: These are energy, material and industrial companies.4) Counter-Cyclicals: These are telecom, utility, consumer staple and health care companies.
Read MoreOver the last five years the signal given by investor positioning in options and futures contracts on the 30-year treasury bond has proven prescient. Each time commercial traders have moved to a long position in the long bond rates have been near a peak.
Read MoreOn an equal-weighted basis, the energy sector has still been the best performing sector in February. It is nearly 7% higher this month, however, it has been the worst performing sector so far this week (-1.5%).
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