Notes from the kitchen - Episode 8 -Taking Stock
1) As we head towards Q3 reporting, a few numbers to think about:
| Current P/E Ratio | YTD Return Base Currency | % Above 100 Day Moving Average | |
|---|---|---|---|
| S&P 500 Index | 19.3 | 0.5% | 4.5% |
| NASDAQ Index | 61.4 | 18.9% | 3.0% |
| EURO STOXX 50 Index | 21.4 | -12.6% | -2.5% |
| FTSE 100 Index | 23.2 | -25.5% | -4.3% |
| Nikkei 225 Index | 37.7 | 1.2% | 4.0% |
| MSCI Emerging Mkt Index | 19.5 | -5.1% | 1.8% |
It’s pretty tough to find another year when (base currency) equity market ytd. returns have been quite so widely dispersed. Nasdaq +18.9%, FTSE 100 Index -25.5%. Crikey!
2) For those looking to gauge underlying market support, our quants (when we occasionally let them out to sample natural light for a couple of minutes), think indices remaining above their 100 Day moving averages is deeply important.
3) This week’s MSCI sector numbers also make pretty painful reading:
| Sector | Weekly Return |
|---|---|
| Technology | -0.85% |
| Communications | -3.65% |
| Consumer Cyclicals | -4.70% |
| Basic Materials | -5.97% |
| Financials | -6.10% |
| Energy | -7.74% |
4) Currencies you ask? Year to date returns:
| YTD Return | |
|---|---|
| USD$ Vs EURO | -4.1% |
| GBP Vs USD$ | -3.6% |
| GBP Vs EURO | -7.4% |
So to summarise: For international investors, (and COVID aside), places definitely not to have been caught visiting recently:
1) Non-US Equities 2) In an index which can’t hold its 100 Day Moving Average 3) In an index with a high Financials and Energy exposure 4) In Sterling
It’s only the 25th September. There’s still time to sell that FTSE tracker from the portfolio before the valuations come out.
A closing thought: Yield on ridiculously overvalued 10-year UK Gilt on 1st Jan 2020 ? 0.80% Return for the Year to Date for the broad Gilt Index? 6.02%