Notes from the Kitchen

Notes from the kitchen - Episode 8 -Taking Stock

  • Sep 25, 2020
  • Craig Farley

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%

TEAM Asset Management is a trading name of Theta Enhanced Asset Management Limited which is regulated by the Jersey Financial Services Commission.