Blog Posts tagged "volatility"

Income Report Card | May 2018

Author: Nathan J. Rowader
Date: May 14, 2018
Category: Asset Allocation, Financial Planning
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The global stock market rebounded in April, gaining 1.03% for the month and bringing the year-to-date return to 0.16%. European stocks led the way with a gain of 2.77% in U.S. dollars and 4.75% in euros. Japan increased by 1.37% in USD and 3.58% in yen terms. Emerging markets didn’t fare as well as developed markets and declined by -0.31% with very little impact from currency. The U.S. stock market managed a small gain of 0.38% with small-cap stocks gaining 0.86% for the month. Domestic energy stocks were a bright spot, finishing the month with a gain of 9.36% as oil hit new multiyear highs.

Income Report Card | April 2018

Author: Nathan J. Rowader
Date: April 16, 2018
Category: Asset Allocation, Financial Planning
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The market volatility that characterized most of February carried into March. Global stocks declined -2.21% led by a selloff in Japan, which declined by -2.79%. The decline was exacerbated only slightly by a decrease in the yen versus the U.S. dollar. Europe was the best performing segment of global stocks, declining -1.20%. However, the increase of the euro relative the U.S. dollar accounted for a substantial portion of the relative outperformance; in local currency, European stocks declined -2.02% for the month. Emerging markets gave up some of their year-to-date relative outperformance and declined -1.99% as the weight of a possible trade war dragged down Chinese stocks. U.S. stocks continued to be a market underperformer, declining -2.54% as the potential for a protracted trade war with China also weighed on future growth. On a bright note, small-cap U.S. stocks performed well with a gain of 1.29%. Defensive sectors rebounded as interest rates stabilized during the month with U.S. real estate increasing by 3.78% and utilities increasing by 3.76%.

Income Report Card | March 2018

Author: Nathan J. Rowader
Date: March 15, 2018
Category: Asset Allocation, Financial Planning
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The global stock market declined -4.20% in the month of February, putting an end to the historic run. Overall, global stocks had a maximum drawdown of -9.02% from the January 26th high, but recovered some of that loss through the rest of February. There were few places to hide from the sell-off as European stocks fell 5.88% and Japanese stocks fell -1.51%. However, the impact of currencies was more mixed in February than it has been in past months. The yen declined against the U.S. dollar in February, so local investors realized a loss of -3.71%. European investors, on the other hand, realized a better relative return of -3.69% due to the appreciation of the euro relative the U.S. dollar. U.S. stocks outperformed their foreign counterparts with a loss of -3.69% while small-cap U.S. stocks declined -3.87%. The sell-off took a toll on energy stocks, which were just starting to climb out of their rut in January, declining -10.84% in February, as measured by the S&P 500 Energy Sector.

Income Report Card | February 2018

Author: Nathan J. Rowader
Date: February 20, 2018
Category: Asset Allocation, Financial Planning
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Global stocks finished at a gain of 5.64% in the month of January, just slightly off their all-time high. Emerging market (EM) stocks led the way once again with a gain of 8.33%.Europe and Japan also marked strong gains for the month with an increase of 5.40% and 4.58%, respectively.However, much of these gains (greater than half) can be attributed to appreciation of the local currency. While appreciation of EM currency relative to other major currencies did push prices, these markets would have still outperformed all developed markets. This distinction is crucial since the performance of EM stocks appears to be organic while other foreign markets are largely a function of appreciating currencies, a dynamic that may or may not persist over time. U.S. stocks fared well in January with again of 5.73% while small-cap U.S. stocks increased by 2.61%. There has been a notable improvement in the performance of energy stocks following a weak 2017.Strength in this part of the market could help keep the overall stock market rising.

Income Report Card | January 2018

Author: Nathan J. Rowader
Date: January 22, 2018
Category: Asset Allocation, Financial Planning
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With 2017 behind us, let’s look back at this remarkable year. Global stocks finished with a gain of 23.92% with foreign markets leading the way thanks in part to a weak U.S. dollar. The emerging markets (EM) represent the biggest winners globally, gaining 37.90% in U.S. dollar terms and 30.55% in local currency. Japan and Europe also posted strong gains with Japanese stocks gaining 23.76% and European stocks gaining 26.62%. In this case, the weaker dollar played an even more meaningful role as European stocks only gained 13.06% in local currency and Japanese stocks gained 19.75% in yen. U.S. stocks were not left behind, finishing the year with a gain of 21.27%. Small-cap U.S. stocks finished the year with a gain of 14.14%. The gains were certainly impressive, but when we look behind the curtain we learn some very interesting facts, most notably that U.S. stocks have gone 282 days without a 3% correction—the longest period in history. Additionally, 42 of the 44 stock markets followed by MSCI posted gains as well as nine of the 11 sectors. The most unusual sector was energy, which posted a decline for the year despite the rise in oil prices, marking the first time in 15 years energy declined while oil rose. Energy also posted the biggest sector swing in year-over-year earnings ever besides financials during the 2008-2009 financial crisis, which we believe is likely a positive sign for energy stocks going into 2018.

Income Report Card | July 2017

Author: Nathan J. Rowader
Date: July 10, 2017
Category: Asset Allocation, Financial Planning
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June was a bit mixed for foreign stocks. Emerging market (EM) stocks led the way with a gain of 1.04% for the month followed by Japanese stocks, which increased by 0.96%. U.S. stocks pulled ahead of Europe this month, posting a gain of 0.62% while European stocks declined by -0.45%. Currency continued to play a vital role in performance as the U.S. dollar declined relative other major currencies. In fact, European stocks did far worse in their local currency, posting a decline of -2.53% in euro terms. Bonds had a wild ride in June with the 10-year Treasury beginning the month at 2.21% and gradually sliding down to 2.14% (a year-to-date low), but jumping back up to 2.31% in the final trading days of the month. The move pushes the yield back into an earlier trading range that, if sustained, may see rates increase as much as 0.30%. For the month of June, global bonds fell 0.09% because of the increase in rates, U.S. high-yield corporate bonds increased 0.14% and EM corporate bonds were flat.

Income Report Card | June 2017

Author: Nathan J. Rowader
Date: June 14, 2017
Category: Asset Allocation, Financial Planning
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May was another positive month for international stocks, which increased by 3.75%, driven by the increasing value of the euro relative the U.S. dollar. In fact, the MSCI Europe Index increased by 4.79% in U.S. dollars, but only 1.65% in euros. Emerging markets (EM) also posted gains, with an increase of 2.97%, although this growth was as bit more organic as currency movement detracted from performance. U.S. stocks increased by 1.41%, bucking the typical “sell in May” mantra. International and EM sovereigns increased by 2.28% and 0.76%, respectively, while U.S. Treasurys increased by 0.83%. Currency also played an important role for international sovereign bonds, as the increase in the value of the euro accounted for nearly 1.50% of the monthly gains. Credit-sensitive sectors gained, but trailed the robust gains in global sovereign markets. U.S. corporate high-yield bonds increased by 1.03% and EM corporate bonds increased by 0.11%.

Income Report Card | May 2017

Author: Nathan J. Rowader
Date: May 8, 2017
Category: Asset Allocation, Financial Planning
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April once again favored foreign stocks over domestic stocks. International stocks increased by 2.61%, outperforming emerging market (EM) stocks, which increased by 2.21%. U.S. stocks managed to finish the month with a positive return of 1.03%. Global bonds increased by 1.13% during the month with foreign bonds outperforming domestic bonds driven by appreciation of foreign currencies against the U.S. dollar, particularly the euro. International and EM sovereign bonds increased by 1.79% and 1.70%, respectively, while U.S. Treasurys increased by 1.70%. Credit-sensitive sectors gained, but trailed the robust gains in global sovereign markets. U.S. high-yield corporate bonds increased by 0.81% and EM corporate bonds increased by 1.48%.

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