EWM Weekly Capital Market Highlights for Week Ended 10/19/2018

By | Financial Markets & Economy, Weekly Capital Market Updates

WEEKLY CAPITAL MARKET HIGHLIGHTS:

  • Among equities, small caps outperformed large caps; value stocks beat growth stocks; international stocks trailed US stocks; and emerging markets underperformed developed  markets.
  • Treasury yields edged up. The yield on the 10-year US Treasury Note ended the week at around 3.2%.
  • Commodity indices little changed. Gold price rose, whereas crude oil prices fell.
  • Dollar indices rose. The dollar appreciated against most major currencies during the week.
  • Among major economic data, September retail sales rose 0.1% from August, well below expectation; initial jobless claims fell by 5,000 from last week to 210,000; September existing home sales fell 3.4% from August.

Click here to download the complete weekly report: EWMWeeklyReview 10.19.18

EWM Weekly Capital Market Highlights for Week Ended 10/11/2018

By | Financial Markets & Economy, Weekly Capital Market Updates

WEEKLY CAPITAL MARKET HIGHLIGHTS:

  • Global equities followed the US lead for the week, with European markets down roughly 4% and Asian markets down more than 5%. Emerging markets equities also were down more than 5%, led by China at -6.7%. The Latin American markets were the only positive region for the week, driven by a post-election rally in Brazil.
  • Treasury yields mostly lower. After last week’s sharp rise, Treasury rates fell back in a shortened week of trading. Both 10-year and 30-year yields were down roughly eight basis points to 3.16% and 3.33%, respectively. Treasury notes from 3-months to 1-year were up 2 to 4 basis points.
  • The US Dollar Index was modestly lower on the week. A slight weakening against both the euro and yen was partially offset by strength against the Chinese yuan.
  • Crude oil finished the week down more than 3% after a modest rise in the first half of the week. Falling global equity prices and rising supplies were the driving factors in the Thursday sell-off.
  • Among other economic data released this week: The IMF cut its forecast for global growth by 0.2% to 3.7% for both 2018 and 2019. Several banks opened up the third quarter earnings season with upbeat reports. JPMorgan Chase, Citigroup, Wells Fargo, and PNC Bank all reported increases in net earnings.

Click here to download the complete weekly report: EWMWeeklyReview 10.12.18

EWM Macro View-September 2018

By | Monthly Commentary

Domestic equities ended mixed for the month of September, as the S&P 500 finished in positive territory, whereas small cap stocks and even several large cap sectors experienced losses. With the continued upward trend for the S&P 500 Index, September brought new record highs for the index, although small caps ended the month in negative territory, falling from record highs set at the end of August. In light of the recent high, it may be worthwhile to reflect on how far stocks have come over the past decade, as September marked the ten-year anniversary of the start of the 2008 financial crisis. It also marks ten years since Lehman Brothers, a 158-year old company, was forced to file for bankruptcy protection, the largest US bankruptcy ever. For context, during the month of September 2008, the S&P 500 Index fell roughly 9% to 1,166. Ten years later, the index has climbed to nearly 3,000. However, the recent high valuations may be giving market participants pause, as they wonder how much longer this bull market can continue, especially as the Federal Reserve (Fed) continues to tighten monetary policy.

 

As was widely expected in September, the Federal Open Market Committee (FOMC) voted to increase the federal funds target range on overnight rates by 25 basis points, to a range between 2.00% and 2.25%, its third rate increase of the year. The trade wars continue to escalate, with China’s State Council accusing the Trump Administration of being a trade bully, as new tariffs on $200 billion worth of Chinese goods and China’s retaliatory on $60 billion worth of US products went into effect. Negotiations between the two countries have ceased for the time being, after Beijing decided not to send a delegation to Washington.

 

For the month, the S&P 500 Index and the Dow Jones Industrial Average (DJIA) returned 0.6% and 2.0%, respectively. This brings the year-to-date gain for the S&P 500 to 10.6% and the DJIA return to 8.8%. However, the tech-heavy NASDAQ declined by 0.7%, bringing its year-to-date return to 17.5%. Within domestic stocks, large cap outperformed small cap equities, as the Russell 1000 Index returned 0.4% and the Russell 2000 posted a loss of 2.4%. Mid cap stocks also outperformed small caps, with the Russell Mid Cap Index losing only 0.6%. Growth stocks continued to outperform value, albeit by a much slimmer margin, as the Russell 3000 Growth Index returned 0.3% compared with a flat month for the Russell 3000 Value Index. Sector performance was mixed, with the Telecommunications sector (which now becomes the Communication Services sector) had the best results, a gain of 4.3%, followed by Health Care at 2.9%, and Energy, which gained 2.6%. On the negative side of sector performance, Financials and Materials struggled, producing returns of -2.2% and -2.1%, respectively. The Bloomberg Commodity Index generated solid performance, with a return of 1.9%.

 

International equities snapped back from losses in August to post slight gains in September, as the MSCI ACWI ex USA Index gained 0.5% and MSCI EAFE gained 0.9%. European Central Bank (ECB) President Mario Draghi reported that the ECB will continue with plans to phase out monetary stimulus as wages and inflation increase. Additionally, Draghi reported that households across the eurozone have experienced their highest growth of disposable income over the last ten years. Although the eurozone economy has slowed slightly over the past year, labor markets remain tight, as some countries and sectors are showing labor shortages, leading the ECB to expect a pickup in inflation. The Brexit negotiations added to uncertainties in the international markets. British Prime Minister Theresa May reported that negotiations are at an impasse, and that Britain stands ready to leave the European Union before a deal is in place. Emerging markets continued to struggle, with a loss of 0.5% (a better return than in prior months), as MSCI Emerging Markets Latin America and MSCI Emerging Markets Eastern Europe added to results. On a year-to-date basis, emerging markets are down 7.7%. Regionally, Japan posted strong results in September, gaining 3.0%, whereas China, which declined 1.4%, continued its poor performance and brought its year-to-date return to -7.5%.

 

Fixed income experienced some weakness, with mostly negative returns across the asset class for the month of September. Although the Bloomberg Barclays U.S. Aggregate Bond Index fell 0.64% for the month, it had a positive return of 0.02% for the quarter, and declined 1.6% on a year-to-date basis. The yield on the 10-Year Treasury Bond increased by 21 basis points, despite a slight decrease after the Fed increased rates. Corporate high yield posted positive performance, returning 0.6% for the month, and bringing its year-to-date gain to 2.6%. Gross domestic product (GDP) increased at a 4.2% annualized rate over the second quarter, and the Fed estimates that GDP will increase to 3.1% for the full year. The employment figures in August were strong: The unemployment rate held at 3.9%, nonfarm payrolls grew by 201K, and average hourly earnings grew by 2.9%.

 

Global bonds trailed domestic fixed income, as the Barclays Global Aggregate ex-U.S. Index declined 1.1%, bringing its year-to-date return to -3.0%. Municipal bonds also generated negative returns, and were roughly in line with their taxable counterparts, with the Bloomberg Barclays Municipal Index returning -0.7% for the month. Within the municipal space, the shorter-term securities fared better, with the 1-3 Year Index beating the 22+ Year Index by 64 basis points.

EWM Weekly Capital Market Highlights for Week Ended 10/04/2018

By | Financial Markets & Economy, Weekly Capital Market Updates

WEEKLY CAPITAL MARKET HIGHLIGHTS:

  • Among equities, large caps outperformed small caps; value stocks beat growth stocks; international stocks trailed US stocks; and emerging markets under-performed developed markets.
  • Treasury yields surged. The yield on the 10-year Treasury jumped above 3.2%, a 7-year high.
  • Commodity indices rose, driven by rising crude oil prices.
  • Dollar indices rose, driven by surging Treasury yields.
  • Among major economic data, the September unemployment rate fell to 3.7%, a 48-year low; the September non-farm payroll increase was less than expected, but the increase of the previous two months was revised sharply upward; the September ISM  Manufacturing Index remained robust at 59.8, and the September ISM Non-Manufacturing Index jumped to 61.6, a 20-year high.

Click here to download the complete weekly report: EWMWeeklyReview 10.5.18

EWM Weekly Capital Market Highlights for Week Ended 09/28/2018

By | Financial Markets & Economy, Weekly Capital Market Updates

WEEKLY CAPITAL MARKET HIGHLIGHTS:

  • Domestic equities were mostly down for the week, with small cap stocks falling the most. International equities were mixed for the week, with emerging markets outperforming its developed counterpart.
  • Treasury yields were mostly down through end of day Thursday, with longer-term yields falling more than shorter yields.
  • The US dollar strengthened during the week, as the Federal Reserve Bank (the Fed) raised rates, and plans to raise rates four more times before the end of 2019.
  • Commodities were up over all, with the price of crude oil continuing to rise over the week, as the Organization of the Petroleum Exporting Countries (OPEC) and its allies decided to maintain their current production targets.
  • In other economic news, the Consumer Confidence Index was released this week, posting a headline number of 138.4, which was an increase from 134.7 in August. The September reading is not far from the all-time high of 144.7 reached in 2000. The strong figure indicates consumers’ favorable outlook on current economic conditions and suggests continued healthy consumer spending.

Click here to download the complete weekly report: EWMWeeklyReview 9.28.18

Endowment Index™ Falls For Week Ended 9/28/2018

By | Endowment Index™

The Endowment Index™ calculated by Nasdaq OMX® (Symbol: ENDOW) closed at 1,276.75 today, falling from last Friday’s close of 1,286.09.

The Endowment Index™ represents the investable opportunity for managers of portfolios utilizing the Endowment Investment Philosophy or otherwise incorporate alternative investments within a comprehensive asset allocation strategy. The Endowment Index measures performance for a multi-asset, globally-diversified, three-dimensional portfolio that includes Global Equity, Global Income, and Alternative Investments (like Private Equity, Hedge Funds and Real Assets). The Index uses an objective, rules-based construction methodology based upon the portfolio allocations of over 800 educational institutions managing over $500 billion in total assets. Each of the 19 sub-indexes that currently comprise the index are investable, and contained within those sub-indexes are over 30,000 underlying securities. You can obtain real-time pricing data on the Endowment Index under the symbol “ENDOW” through major quote providers, including Bloomberg, Google Finance and others. The Morningstar® Index ID for the Endowment Index is F00000TPG6.

Past performance is not necessarily indicative of future results. You cannot invest directly in an index. Indexes do not contain fees. today, rising from last Friday’s close of 1,269.23.

 

EWM Weekly Capital Market Highlights for Week Ended 09/21/2018

By | Financial Markets & Economy, Weekly Capital Market Updates

WEEKLY CAPITAL MARKET HIGHLIGHTS:

  • US equity markets pushed into record territory after brushing off talk of a renewed trade spat with China. The S&P 500 Index was up nearly 1% for the week, as value stocks led growth stocks across the market capitalization spectrum. Small cap stocks, roughly flat for the week, trailed large cap stocks.
  • Developed non-US markets enjoyed strong gains throughout the week, with the MSCI EAFE Index up more than 2% and value stocks leading growth stocks. The gains came on the back of a weakening dollar, which was down around 1% versus a basket of currencies. Emerging markets also rose during the week, but to a lesser degree than developed markets, and value stocks finished the week significantly ahead of growth stocks. China was able to shake off trade conflict news to finish the week up more than 1.5%.
  • The yield curve shifted upward during the week, with the yield on the 10-Year Treasury Note beginning the week at 2.99% and rising to 3.07% on Thursday. That movement also steepened the yield curve slightly, as the yield on the 2-Year Treasury Bill moved only three basis points, from 2.78% to 2.81%. The upward shift in the yield curve was primarily due to increased inflation expectations.
  • Commodities moved higher as well, led by the price of crude oil. Crude oil was pushed higher by news that US stockpiles fell by 2.1 million barrels, marking the fifth consecutive weekly decline and, notably, its lowest level since February of 2015.

Click here to download the complete weekly report: EWMWeeklyReview 9.21.18

Endowment Index™ Gains For Week Ended 9/21/18

By | Endowment Index™

The Endowment Index™ calculated by Nasdaq OMX® (Symbol: ENDOW) closed at 1,286.09 today, rising from last Friday’s close of 1,269.23.

The Endowment Index™ represents the investable opportunity for managers of portfolios utilizing the Endowment Investment Philosophy or otherwise incorporate alternative investments within a comprehensive asset allocation strategy. The Endowment Index measures performance for a multi-asset, globally-diversified, three-dimensional portfolio that includes Global Equity, Global Income, and Alternative Investments (like Private Equity, Hedge Funds and Real Assets). The Index uses an objective, rules-based construction methodology based upon the portfolio allocations of over 800 educational institutions managing over $500 billion in total assets. Each of the 19 sub-indexes that currently comprise the index are investable, and contained within those sub-indexes are over 30,000 underlying securities. You can obtain real-time pricing data on the Endowment Index under the symbol “ENDOW” through major quote providers, including Bloomberg, Google Finance and others. The Morningstar® Index ID for the Endowment Index is F00000TPG6.

Past performance is not necessarily indicative of future results. You cannot invest directly in an index. Indexes do not contain fees.

The Endowment Index™ Posted a Gain For Week Ended 9/14/18

By | Endowment Index™

The Endowment Index™ calculated by Nasdaq OMX® (Symbol: ENDOW) closed at 1,269.23 Friday, rising from last Friday’s close of 1,253.92.

The Endowment Index™ represents the investable opportunity for managers of portfolios utilizing the Endowment Investment Philosophy or otherwise incorporate alternative investments within a comprehensive asset allocation strategy. The Endowment Index measures performance for a multi-asset, globally-diversified, three-dimensional portfolio that includes Global Equity, Global Income, and Alternative Investments (like Private Equity, Hedge Funds and Real Assets). The Index uses an objective, rules-based construction methodology based upon the portfolio allocations of over 800 educational institutions managing over $500 billion in total assets. Each of the 19 sub-indexes that currently comprise the index are investable, and contained within those sub-indexes are over 30,000 underlying securities. You can obtain real-time pricing data on the Endowment Index under the symbol “ENDOW” through major quote providers, including Bloomberg, Google Finance and others. The Morningstar® Index ID for the Endowment Index is F00000TPG6.

Past performance is not necessarily indicative of future results. You cannot invest directly in an index. Indexes do not contain fees.

EWM Weekly Capital Market Highlights for Week Ended 09/14/2018

By | Financial Markets & Economy

WEEKLY CAPITAL MARKET HIGHLIGHTS:

  • Global equity markets were mostly up on the week through Thursday. Developed European markets posted the best returns, which fell in the low-single digits. Greece and India posted the worst returns, falling by over 2%.
  • The Treasury yield curve stayed essentially constant through Thursday. Yields on notes and bonds with maturities longer than two years rose marginally. Inflation decelerated in August, as headline Consumer Price Index (CPI) was up 2.7%. According to data in the US Department of Labor, decelerating medical cost increases, falling apparel prices, and steady food costs led inflation to come in below consensus expectations. Core CPI, which strips out volatile food and energy price shifts, also fell below expectations and increased 2.2% year over year through August.
  • Commodities were broadly up on the week. Energy, Livestock, and Precious and Industrial Metals rose through Thursday. Agriculture fell, as declining corn, soy, and wheat prices pulled this sector down due to robust harvest projections.
  • The US Dollar fell this week against a basket of major trade partners’ currencies. However, the US Dollar Index remains stronger than it was at any point in 2018 prior to July.
  • In other economic news: The Federal Reserve’s (the Fed) assets totaled $4.211 trillion on September 12. This figure is up slightly from last week, as reserves rose and the mortgage-backed security (MBS) roll-off has fallen behind schedule, but is down roughly $250 billion from October 2017, when the Fed began to trim its balance sheet. The NFIB Small Business Optimism Index stands at a record high.

Click here to download the complete weekly report: EWMWeeklyReview 9.14.18