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Market/Model Commentary
Please find below the following:
- Current 5-Factor Model
- Current Market Commentary/Analysis
ECAM 5-Factor Model
(as of market close 25 May 2018)
|
Economic Model
Valuation Model Technical Model Sentiment Model Financial Stress Model |
GREEN
RED GREEN YELLOW GREEN |
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GREEN |
"Slow and Steady wins the race"
The Hare and the Tortoise
Aesop (Greek slave & fable author 620 BC - 560 BC)
"Technical Analysis is a windsock, not a crystal ball"
Carl Swenlin
The Hare and the Tortoise
Aesop (Greek slave & fable author 620 BC - 560 BC)
"Technical Analysis is a windsock, not a crystal ball"
Carl Swenlin
Summary
The past week delivered mixed equity market returns with modestly positive returns in the U.S. and Emerging Markets offset by strong declines in Europe on the back of political issues in both Italy and Spain. As a result, global equities were modestly lower on the week.
Bonds were strong over the past week on the back of Flash PMI data showing muted growth and inflation in most major regions. Real Estate (both U.S. and Int'l) was flat-to-higher on the week as a result of the interest rates modestly declining in most regions. Precious metal producers were flat over the past week with both gold and silver prices modestly higher.
We have now exited the critical Q1 2018 earnings reporting period with little change on equity markets. Clearly the good news was priced into equities in late 2017 and now markets are looking for a new catalyst to move out of the 3 month trading range. The overhang of ongoing geopolitical issues (as well as trade war concerns with respect to the U.S. vs. the World) continues to weigh on markets. Any good news on either of these 2 fronts would in all likelihood propel equity markets higher.
We continue to monitor 2 chart patterns which have the potential to signal the end of this equity bull market (discussed below). The longer prices do not trigger the pattern the less chance they come for fruition but they remain technically valid at present.
No changes to portfolio positions are indicated according to our model outputs.
Bonds were strong over the past week on the back of Flash PMI data showing muted growth and inflation in most major regions. Real Estate (both U.S. and Int'l) was flat-to-higher on the week as a result of the interest rates modestly declining in most regions. Precious metal producers were flat over the past week with both gold and silver prices modestly higher.
We have now exited the critical Q1 2018 earnings reporting period with little change on equity markets. Clearly the good news was priced into equities in late 2017 and now markets are looking for a new catalyst to move out of the 3 month trading range. The overhang of ongoing geopolitical issues (as well as trade war concerns with respect to the U.S. vs. the World) continues to weigh on markets. Any good news on either of these 2 fronts would in all likelihood propel equity markets higher.
We continue to monitor 2 chart patterns which have the potential to signal the end of this equity bull market (discussed below). The longer prices do not trigger the pattern the less chance they come for fruition but they remain technically valid at present.
No changes to portfolio positions are indicated according to our model outputs.
WEEKLY ASSET CLASS MONITOR
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Asset Class
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Region
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ETF Ticker
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Weekly Gain/Loss
|
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Equities
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World
U.S. Europe Asia Pacific Emerging Market |
VT
VTI VGK VPL EEM |
-0.32%
+0.29% -1.79% -0.69% +0.78% |
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Bonds
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U.S. Bonds
International Bonds |
BND
BNDX |
+0.75%
+0.24% |
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Real Estate Equities
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U.S. Real Estate
International Real Estate |
VNQ
VNQI |
+2.49%
-0.20% |
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Precious Metals Equites
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Global Gold Miners
Global Silver Miners |
RING
SIL |
+0.56%
-0.26% |
As shown below, each of the 5 key equity regions we monitor remain confined to a range defined by the 08 Feb closing lows and the 26 Feb subsequent market peaks. A close below each of the 08 Feb lows would be a very bearish indication (and possibly the end of the bull market). Alternatively, should each region be able close and maintain above the 26 Feb closing highs this would be a very bullish outcome pointing to much higher prices into the summer.
Unfortunately at present regional equity markets remain confined to price holding patterns within their respective "wait-and-see" zones as they digest the latest geopolitical news and potential trade war rhetoric.
Unfortunately at present regional equity markets remain confined to price holding patterns within their respective "wait-and-see" zones as they digest the latest geopolitical news and potential trade war rhetoric.
Below is the year-to-date returns for each of the monitored equity regions. As can be seen, as of Fridays market close most equity regions remain positive thus far in 2018 (with both Europe as well as Emerging Markets having fallen fractionally negative year-to-date).
Below is our monitor of the top 6 U.S. technology companies and their recent market performance. Most mutual funds hold large positions in the following companies and should large-cap technology companies begin to falter it would likely signal an end to the bull market (we consider these "Big 6" to be the the "canary in the coal mine" stocks):
- Facebook
- Alphabet (Google)
- Apple
- Amazon
- Microsoft
- Netflix
Each of the "Big 6" remains above their respective 200 day moving averages and near new all time highs over the past week. This remains bullish.
We have identified and continue to monitor 2 critical market patterns (one in the S&P 500 index and one in the NASDAQ 100 index) that potentially could be signaling the end of the current bull market (both have the potential for >20% market declines):
- S&P 500 index: Bearish Descending Triangle pattern
- NASDAQ 100 index: Bearish Head and Shoulders topping pattern
It is very important to point out these have the potential to be signally weakness ahead but have yet to confirm. As such, they are on our radar (and we are monitoring closely) but it is premature to take action until confirmed. A positive step this past week was the "1st hurdle" on the S&P 500 held. This reduces the probability of the pattern triggering but it would also need to exceed the "2nd hurdle" above 2787 to drastically reduce the odds of the patters bearish implications. One step at a time.
Overall Summary:
- Equity markets pulled back from severe overbought conditions from late Jan-early Feb 2018. Since then they have remained range bound as they assess ongoing geopolitical and trade war considerations.
- Typically such extreme volatility that occurred early in 2018 takes a period of several months to work itself out. Volatility has reduced considerably over the past several weeks.
- Bonds have been weak due to sudden market fixation upon inflation fears. It is becoming increasingly likely the bull market in bonds may have ended should critical yield levels (shown in the bond section of the report) be exceeded.
- World growth still remains slow/steady and there is no indications of pending recession.
- The equity markets are "late-stage". We still believe this bull market in equities has room to run but are on watch for a market top.
- Monthly ongoing contributions are never modified and remain as per the Monthly Allocation model to take advantage of lower unit prices on pullbacks.
- The 5-Factor model remains GREEN. Risk averse investors may wish to wait to fully reinvest until each of the world equity regions establish new short term technical uptrends.
Asset Class Return Monitor
(for week ending 25 May 2018)
(for week ending 25 May 2018)
Equities Legend:
Bonds Legend:
Currencies Legend:
Commodities Legend:
- Vanguard Total World Stock ETF (VT): (Cyan)
- Vanguard Total U.S. Stock Market ETF (VTI): (Red)
- Vanguard FTSE Europe ETF (VGK): (Lime Green)
- Vanguard FTSE Asia Pacific ETF (VPL): (Blue)
- Vanguard FTSE Emerging Markets ETF (VWO): (Pink)
Bonds Legend:
- Vanguard Total U.S. Bond Market ETF (BND): (Black)
- Vanguard Total International ex-U.S. Bond ETF (BNDX): (Green)
Currencies Legend:
- U.S. Dollar Index (Cash Settlement EOD) ($USD): (Orange)
- Euro (Philadelphia Index) ($XEU): (Maroon)
Commodities Legend:
- PowerShares DB Commodity Index Tracking Fund (DBC): (Purple)
Past Week Asset Class returns
- Over the past week world equites (as measured by the Vanguard Total World Stock ETF (shown in CYAN) lost -0.32%.
- Emerging market equities were the top performing regional equity market this past week with European markets lagging.
- U.S. bonds (Black) and International bonds (Green) were strong on the week.
- Commodities were modestly down over the past week.
- The USD was strong on the week.
Year-to-Date (2018) Asset Class returns
- Thus far in 2018 world equites (as measured by the Vanguard Total World Stock ETF (shown in CYAN) have gained +1.28%.
- U.S. equities have been the top performing equity region thus far in 2018 with Emerging markets lagging.
- Bonds have shown mixed returns thus far in 2018 with International Bonds (Green) outperforming U.S. bonds (Black).
- Commodities remain very strong and the USD has now turned positive for 2018.
While we remain positive on equity markets over the next quarter, we remain concerned about excessive equity valuation (especially in the U.S.) relative to historical values. Markets continue to be priced for perfection and and any one of the following events (which we refer to as the 6 Horsemen of the Apocalypse) could quickly bring on a recession and a rapid reduction (40%+) in equity prices:
* Note for the 1st time one of our major event triggers (potential trade disruption due to trade tariffs) has triggered with the recent announcement out of the US imposing $50B in trade tariffs on China (with another further $100B proposed). This has the potential to escalate rapidly into international trade wars which NEVER result in increased equity prices. This is a major concern we will monitor over the near term.
- a central bank policy mistake (excessive balance sheet reduction and/or interest rate increases)
- a major disruption to international trade (trade wars or tariffs)
- a surge in inflation
- a surge in yields (which may be occurring currently)
- US dollar appreciation
- a geopolitical shock (region military conflict, war)
* Note for the 1st time one of our major event triggers (potential trade disruption due to trade tariffs) has triggered with the recent announcement out of the US imposing $50B in trade tariffs on China (with another further $100B proposed). This has the potential to escalate rapidly into international trade wars which NEVER result in increased equity prices. This is a major concern we will monitor over the near term.
Typically bull/bear markets follow a cycle of investor psychology which peaks with euphoria.
In the big picture, it is apparent we had recently seen signs of investor exhilaration/euphoria beginning to unfold. As such, now we have entered the stage where fundamentals have been overridden by greed pushing market valuations to extremes.
Typically bull market bubbles end in 3 distinct phases:
- a period of exponential rising prices,
- a consolidation period, and
- a final blow-off phase into extreme over-valuation before a massive market crash.
It must be reemphasized a complete market cycles is composed of 2 distinct cycles/phases: a Bull phase and a Bear phase. We are currently within the the final innings of the "bull 1/2 cycle" and the "bear 1/2 cycle" is yet to come. The key to long term investment success is to protect the majority of those bull 1/2 cycle gains when the bear market comes calling.
We illustrate current market overvaluation via 3 charts produced by Crestmont Research (as of 01 May with data from 1871-to-present. While it is not necessary to understand exactly how the data is plotted, it is important for every investor to realize where current valuations stand relative to history.
In the following graphs note the following:
- the Crestmont Price/Earnings (P/E) ratio is at 31.4 and remains the 2nd most expensive market valuation since 1871; only exceeded by the dot com market bubble in 2000 (which it has almost matched at the end of January 2018). It has now greatly exceeded both the 2007 peak (24.7) and 1929 peak (26.4) as shown on the 1st chart,
- when compared to inflation the current Crestmont P/E is now well within the top region of the orange bubble zone defining the 1998-2000 bubble peak as shown on the 2nd chart,
- the current Crestmont P/E is 136% above its geometric mean (topped @ 152% in Jan 2018); well above the 2007 peak (89%) and 1929 peak (99%) as shown on the 3rd chart. Only the 2000 peak at 154% has been higher since 1871.
This does not mean a market crash is imminent but it does mean we are (on a valuation basis) well within the last innings of this bull market. We have entered the dangerous period near the end of bull markets where only a minor change in either investor risk appetite or economic performance would be all it takes to "upset the apple cart".
Unfortunately valuation measures are a "blunt instrument" when it comes to market timing. Each bull market is different in character and market sentiment can remain bullish long past metrics of reasonable valuation. However, from a risk-reward perspective it is essential to understand risk is now highly elevated and long term equity returns (on a buy-and-hold basis) are extremely low.
It cannot be overstated how important it is to protect the bulk of one's market gains during the bear market half-cycle. As can be seen below, as the percentage losses increase the required returns to get back to breakeven move in an exponential manner:
Unfortunately valuation measures are a "blunt instrument" when it comes to market timing. Each bull market is different in character and market sentiment can remain bullish long past metrics of reasonable valuation. However, from a risk-reward perspective it is essential to understand risk is now highly elevated and long term equity returns (on a buy-and-hold basis) are extremely low.
It cannot be overstated how important it is to protect the bulk of one's market gains during the bear market half-cycle. As can be seen below, as the percentage losses increase the required returns to get back to breakeven move in an exponential manner:
- a 20% loss requires a 25% gain
- a 30% loss requires a 43% gain
- a 40% loss requires a 67% gain
- a 50% loss requires a 100% gain
This is why it is so important to not let losses continue in the face of a bear market and why we advocate phased movements into cash as our 5-factor model reverts towards Red. The below graphic represents how we move within equity markets through a complete market cycle:
Given current market valuations and our expectation of a -50% or greater decline during the next bear market, "careful and cautious" remains our game plan. When we enter this sort of environment we can play the game on the long side but carefully eye the door for when the music stops. We have no intention in participating in the substantial downside yet to come to complete this current market cycle.
World Regional Equity Monitor
We use the following U.S. exchange traded funds to monitor equity performance for the various world regions:
- World Equities: Vanguard Total World ETF (Cyan)
- U.S. Equity: Vanguard Total Market ETF (Red)
- Pacific Equity: Vanguard FTSE Pacific ETF (Blue)
- European Equity: Vanguard FTSE Europe ETF: (Lime Green)
- Emerging Market Equity: Vanguard FTSE Emerging Market ETF (Pink)
1 Year Rolling Regional Equity Performance
- Over the past 12 month rolling period regional equity performance remains positive for all regions.
- The strongest equity region over the past 12 month has been Asia Pacific Markets with European equities continuing to lag.
- Overall world equity performance (as measured by the Vanguard Total World ETF) remains positive with a return of +13.10% (including dividends) over the past 12 month rolling period.
3 Month Rolling Regional Equity Performance
- Over the past 3 month rolling period the strongest performing world equity region has been U.S. markets with Emerging markets the weakest.
- Only U.S. equities have returned positive performance over the past quarter (3 months).
1 Month Rolling Regional Equity Performance
- Over the past 1 month rolling period the strongest performing world equity region has been U.S. equity markets with European markets the weakest.
- Mixed return performance has been exhibited over the past month with Europe lagging.
Past Week Regional Equity Performance
- Over the past week Emerging markets were the strongest performing equity region with European markets lagging.
Latest Global Equity "Big Picture"
World equity market returns are monitored via the following charts:
Dow Jones Global Market Index
(market cap weighted index)
For the week the Dow Jones Global Index had a loss of -0.40%. As can be seen on the above chart, price remains below the trend line from the Feb 2016 lows but remains above the 65 week moving average and above its recent market lows. This is encouraging but this level must hold on any near term pullback.
A reminder we had remained (from early 2013 until early 2017) within a frustrating consolidation zone in most world equity markets as the battle between debt and deflation is fought by Central Banks with unprecedented market liquidity, currency devaluation and stock/bond manipulation. There are indications diminishing returns are being achieved by ongoing Central Bank manipulation but this has not stopped them from continuing to do so with vigor. It is primarily this CB support which has led to the current market gains and we expect as this stimulus is removed equity market performance will suffer greatly.
A reminder we had remained (from early 2013 until early 2017) within a frustrating consolidation zone in most world equity markets as the battle between debt and deflation is fought by Central Banks with unprecedented market liquidity, currency devaluation and stock/bond manipulation. There are indications diminishing returns are being achieved by ongoing Central Bank manipulation but this has not stopped them from continuing to do so with vigor. It is primarily this CB support which has led to the current market gains and we expect as this stimulus is removed equity market performance will suffer greatly.
Value Line Geometric Index and Global Dow Index
(equal weighted indexes)
(equal weighted indexes)
The Value Line Geometric Index (top panel) is the median price performance of 1700 U.S. companies equal weighted (as opposed to most indexes which are market cap weighted) into an index. Below that is the Global Dow index (bottom panel). It is a measure of the top 150 international companies equal weighted within the index and represents a good overview of equity performance worldwide. Both remain above their early Feb 2018 lows within consolidation patterns.
The below chart shows the importance the 527-534 price area for XVG. Throughout most of 2017 this level acted as resistance but was broken upwards in Sep 2017. In technical analysis, resistance once broken acts as support (which it has on the recent pullbacks in Feb 2018). A break below this support would be a very bearish development but as of now it has continued to hold.
The below chart shows the importance the 527-534 price area for XVG. Throughout most of 2017 this level acted as resistance but was broken upwards in Sep 2017. In technical analysis, resistance once broken acts as support (which it has on the recent pullbacks in Feb 2018). A break below this support would be a very bearish development but as of now it has continued to hold.
iShares MSCI ACWI ETF
(market cap weighted ETF)
(market cap weighted ETF)
The iShares MSCI ACWI (All Country World Index) ETF is used as a benchmark to compare the performance of the various broad-based equity funds available in the Emirates Group Provident Scheme (EGPS) A/B/C accounts. It serves as a benchmark to determine how equity markets are performing on a worldwide basis. This assists in determining 2 parameters; whether to be invested in equities and also which funds within the EGPS offer the best performance relative to the benchmark.
The ETF is composed of the following regional components/weightings:
The ETF is composed of the following regional components/weightings:
ACWI Monthly Chart (since 2009)
As shown on the monthly chart above, world equity markets had been stuck in a fairly narrow trading range (shown as the yellow band) from October 2013-December 2016. Only once world growth began to reappear in late 2016 did world equity markets begin to react with a breakout of the range. This remains long term bullish for world equities.
For the month of May ACWI has gained +1.28%. It remains above the support @ 58.91 as well as the 12 month price moving average and trendline from the 2009 market lows. This remains a bullish but this support must hold on any market pullbacks.
For the month of May ACWI has gained +1.28%. It remains above the support @ 58.91 as well as the 12 month price moving average and trendline from the 2009 market lows. This remains a bullish but this support must hold on any market pullbacks.
ACWI Weekly Chart
This past week ACWI lost -0.33%. Price continues to hold above the 65 week simple moving average (which acted as support throughout the 2014-2015 topping process with a break below in Aug 2015 leading to the price declines into Feb 2016) and this past week remained below the uptrend line from the Feb 2016 lows. It remains above the 2018 price pivot @ 67.56 (which we expect will hold this decline).
World Equity Market Regional Relative Rotation Graphs
Below is a graph of 23 major regional equity market ETF's + ACWI (our world equity benchmark) shown on a Relative Rotation chart measured weekly with a 10 week look-back period (which forms the "tail" of the ETF). This graph allows us to observe over time how various regional ETF's are moving relative to both each other and also relative to cash.
- Leading (Green): (Momentum Positive + Price Relative Strength Positive)
- Weakening (Yellow): (Momentum Negative + Price Relative Strength Positive)
- Lagging (Red): (Momentum Negative + Price Relative Strength Negative)
- Improving (Blue): (Momentum Positive + Price Relative Strength Negative)
Given the cyclical nature of momentum and price within equity markets, in general the RRG charts will cycle in a clockwise manner (though not necessarily will each pass through all 4 quadrants as it is possible to rotate through an adjacent quadrant only).
Weekly Regional (Country) Relative Rotation Graphs (long term)
Over the past week the RRG quantitative relative scoring fell fractionally to -30 quantitative net score. ACWI (our world equity fund benchmark) remained within the RED "Lagging" quadrant this past week.
The RRG trend analysis status remains BEARISH for world equities:
The RRG trend analysis status remains BEARISH for world equities:
- Price Relative Strength: Negative
- Price Momentum: Negative
Coincident Equity Market Indicators
Crude Oil
Crude oil was down sharply over the past week closing below $70 USD. There is very little weekly-close price resistance up to $79.00. It continues to point to gradually increasing demand on the back of world economic growth improvement. This remains bullish for global equities at current prices but a large rise towards $100 would be concerning (rate of change is more important than levels at this point).
Gold
Gold was modestly higher over the past week. It remains range bound below 5 year resistance @ 1350-1400 but it has come significantly off its late 2015 lows. It currently indicates little risk of inflation or equity market stress. This remains bullish for global equities.
Commodities
Commodities were fractionally lower over the past week. They closed the week above previous resistance from the Oct 2015 close of 202.69. This remains bullish for world growth and therefore global equites.
U.S. 30 Year Treasury Bond
U.S. 30 year bonds were stronger on the week and remain below their 3 year long support near $146. This is concerning as rising yields (which move inverse to bond prices) will weigh on corporate borrowing and may hinder the equity advance if rates move too quickly. This is currently equity market neutral but should they continue to fall this will eventually put yield pressure on equities.
Current 5-Factor Model Indications
The combined 5-Factor quantitative model switched to GREEN as of 09 Dec 2016. The 5-Factor Green zone indicates investors should look to position portfolios equity bullish as determined by your risk tolerance group (access by clicking on the "Current Model Portfolio Positions" link shown below):
Click the following link to access current model positioning: "Current Model Portfolio Positions"
The 5-Factor model currently has the following sub-model readings:
Click the following link to access current model positioning: "Current Model Portfolio Positions"
The 5-Factor model currently has the following sub-model readings:
Economic Model
The Economic model switched to GREEN in early 2017 on the back of subtle but gradually improving world growth:
- The OECD Leading Composite Indicators continue to show projected stable economic growth through most regions over the next 6-9 months (with the exception of Europe, Japan and Canada which have weakened over the past month).
- The Global Composite Purchasing Managers Index remains positive (showing expansion) but the rate of growth within the Eurozone has fallen over the past month.
- The latest IMF World Economic Report continues to show slow/stable world growth projections for 2018/2019 with global debt currently its main focus of worry.
OECD Leading Composite Indicators (14 May 2018)
J.P. Morgan Global Composite Purchasing Managers Index (04 May 2018)
IMF World Economic Report Executive Summary (April 2018)
U.S. Economic Growth
Year-over-Year GDP growth
The Gross Domestic Product (GDP) in the United States expanded 2.90 percent in the first quarter of 2018 over the same quarter of the previous year. GDP Annual Growth Rate in the United States averaged 3.19 percent from 1948 until 2018, reaching an all time high of 13.40 percent in the fourth quarter of 1950 and a record low of -4.10 percent in the second quarter of 2009.
Quarter-over-Quarter GDP growth
The US economy expanded an annualized 2.3 percent on quarter in the first quarter of 2018, below 2.9 percent in the previous period but beating market expectations of 2 percent. Still, it s the lowest growth rate in a year, the advance estimate showed. The increase in real GDP reflected positive contributions from nonresidential fixed investment, personal consumption expenditures (PCE), exports, private inventory investment, federal government spending, and state and local government spending. GDP Growth Rate in the United States averaged 3.21 percent from 1947 until 2018, reaching an all time high of 16.90 percent in the first quarter of 1950 and a record low of -10 percent in the first quarter of 1958.
Eurozone Economic Growth
Year-over-Year GDP growth
The Eurozone's gross domestic product grew by 2.5 percent year-on-year in the first quarter of 2018, unrevised from the preliminary estimate and below 2.8 percent in the previous period. GDP Annual Growth Rate in the Euro Area averaged 1.69 percent from 1995 until 2018, reaching an all time high of 5 percent in the first quarter of 1995 and a record low of -5.50 percent in the first quarter of 2009.
Quarter-over-Quarter GDP growth
The Eurozone's gross domestic product grew by 0.4 percent on quarter in the three months to March 2018, unrevised from the preliminary estimate and below 0.7 percent in the previous period. Among the bloc's largest economies, GDP growth slowed in Germany and France, and was unchanged in Italy and Spain. Compared with the same quarter of the previous year, the Eurozone economy expanded 2.5 percent, also unrevised from the flash estimate and slightly below 2.8 percent in the previous period. GDP Growth Rate in the Euro Area averaged 0.39 percent from 1995 until 2018, reaching an all time high of 1.30 percent in the second quarter of 1997 and a record low of -2.90 percent in the first quarter of 2009.
Japan Economic Growth
Year-over-Year GDP growth
The Gross Domestic Product (GDP) in Japan expanded 0.90 percent in the first quarter of 2018 over the same quarter of the previous year. GDP Annual Growth Rate in Japan averaged 2.01 percent from 1981 until 2018, reaching an all time high of 9.40 percent in the first quarter of 1988 and a record low of -8.80 percent in the first quarter of 2009.
Quarter-over-Quarter GDP growth
The Japanese economy contracted 0.2 percent on quarter in the three months to March of 2018, after a downwardly revised 0.1 percent growth in the previous period while markets expected no growth, preliminary estimates showed. It is the first contraction since the fourth quarter 2015, as private investment fell and households' consumption stagnated. On an annualized basis, the GDP shrank 0.6 percent, compared to a downwardly revised 0.6 percent expansion in the preceding quarter. The figure came in worse than market expectations of a 0.2 percent contraction and ended the longest growth streak in 28 years. GDP Growth Rate in Japan averaged 0.50 percent from 1980 until 2018, reaching an all time high of 3.20 percent in the second quarter of 1990 and a record low of -4.90 percent in the first quarter of 2009.
China Economic Growth
Year-over-Year GDP growth
The Chinese economy advanced 6.8 percent year-on-year in the March quarter of 2018, the same pace as in the previous two quarters. Figure was in line with market consensus, mainly supported by solid consumption, property investment and exports. GDP Annual Growth Rate in China averaged 9.63 percent from 1989 until 2018, reaching an all time high of 15.40 percent in the first quarter of 1993 and a record low of 3.80 percent in the fourth quarter of 1990.
Quarter-over-Quarter GDP growth
The Chinese economy grew by 1.4 percent quarter-on-quarter in the three months to March of 2018, compared to an advance of 1.6 percent in the previous period and slightly below market expectations of 1.5 percent. It was the weakest pace of expansion since the first quarter of 2016. GDP Growth Rate in China averaged 1.81 percent from 2010 until 2018, reaching an all time high of 2.40 percent in the first quarter of 2011 and a record low of 1.30 percent in the first quarter of 2016.
Valuation Model
The Valuation model remains RED/negative due to overvaluation of equity markets at current prices relative to historical data. We continue to update forecasts from a number of historically reliable sources (see section titled "Market Valuation"). Long term equity returns vary inversely with market valuation and at current price levels forward returns will be much lower than historical average returns (projected to be approximately 2% per year ex-inflation over the next 10 years).
Technical Model
The Technical model remained GREEN this past week. World Equity markets remain within uptrends in all time frames (short, intermediate and long term). Market breadth remains consistent with bull market conditions.
Sentiment Model
The Sentiment model remained YELLOW this week on the back of a neutral sentiment among retail and institutional investors (sentiment acts as an inverse trading indicator).
Economic Stress Model
The U.S. Economic Stress model remains GREEN this week with very little U.S. financial stress indicated. Our 1 year forward U.S. recession indicators remained "Low Risk" but our Global ex-U.S. 1 year forward recession indicators recently moved up to "Moderate Risk".
World Bond Asset Class Return Monitor
We use the following U.S. exchange traded funds to monitor bond performance for the various bond asset classes:
Total Market Bond Basket:
- U.S. Total Bond Market (BND): (Red)
- International (ex-U.S.) Total Bond Market (BNDX): (Blue)
- U.S, Gov't Bonds (GOVT): (Orange)
- Foreign Developed Market Gov't Bonds (BWX): (Pink)
- U.S. Corporate Bond (LQD): (Maroon)
- International Corporate Bond (PICB): (Black)
- U.S. High Yield Bond (JNK): (Purple)
- International High Yield Bond (IHY): (Green)
- U.S. Gov't Inflation Protected Bonds (TIP): (Lime Green)
- International Gov't Inflation-Protected Bond (WIP): (Cyan)
1 Year Rolling Bond Performance
- Over the past 12 months rolling period the top performing bond asset class has been International Treasury Bonds with U.S. Gov't Bonds the worst performing.
- The U.S. Total Bond Market (RED) and the International (ex-U.S.) Total Bond Market (BLUE) have delivered mixed returns over the past year.
3 Month Rolling Bond Performance
- Over the past 3 month rolling period the top performing bond asset class has been U.S. Inflation Protected Bonds with Int'l Gov't Inflation Protected Bonds lagging.
- U.S. Total Bond Market (RED) has delivering flat returns over the past quarter with the International (ex-U.S.) Total Bond Market (BLUE) having delivering moderately positive returns over the past quarter (3 months).
1 Month Rolling Bond Performance
- Over the past 1 month rolling period the top performing bond asset class has been US Corporate Bonds with Int'l Corporate Bonds lagging.
- The U.S. Total Bond Market (RED) and the International (ex-U.S.) Total Bond Market (BLUE) have delivering positive returns over the past month.
Past Week Bond Asset Class Performance
- Over the past week U.S. Corporate bonds were the strongest performing bond asset class with Int'l Corporate bonds lagging.
- The U.S. Total Bond Market (RED) and the International (ex-U.S.) Total Bond Market (BLUE) bond returns were positive over the past week.
Commentary:
It has been shown in repeated studies over many years a balanced portfolio consisting of both equities and bonds (with percentage holdings in each adjusted according to personal risk tolerances) remains the best methodology in managing a long term retirement portfolio (due to the independent/low correlated function each takes when navigating though various market cycles and economic conditions).
It is best to think of bonds and equities as 2 independent brains each looking at the market from a different perspective:
As such, both serve a useful purpose in a well balanced portfolio.
Bonds delivered positive returns in 2017 as low inflation and weak growth persisted. We are very cognizant of the fact bond yields are potentially at generational lows (prices overbought and at generational highs) and any significant economic recovery (with associated increases in inflation) has the potential to be very detrimental to bond fund returns.
Rolling 12 month returns for bonds remain positive but recent weakness has been noted and we are monitoring closely US, German & Japanese rates to determine if (when) it may be appropriate to reduce bond positions. Our premise is these 3 bonds tend to be somewhat "tethered" due to capital flows so it would take a breakout in all 3 key Treasuries above their respective price levels (described below) in order to definitively state the bull market in bonds is over.
As of present International bond funds have not been affected by the rise in rates as U.S. bond funds have. We are reassessing each of the bond funds within our models to determine their exposure to duration risk should rates outside the U.S. also begin to rapidly rise.
It is best to think of bonds and equities as 2 independent brains each looking at the market from a different perspective:
- Equities: Corporate profits focused.
- Bonds: Economic growth and Inflation focused.
As such, both serve a useful purpose in a well balanced portfolio.
Bonds delivered positive returns in 2017 as low inflation and weak growth persisted. We are very cognizant of the fact bond yields are potentially at generational lows (prices overbought and at generational highs) and any significant economic recovery (with associated increases in inflation) has the potential to be very detrimental to bond fund returns.
Rolling 12 month returns for bonds remain positive but recent weakness has been noted and we are monitoring closely US, German & Japanese rates to determine if (when) it may be appropriate to reduce bond positions. Our premise is these 3 bonds tend to be somewhat "tethered" due to capital flows so it would take a breakout in all 3 key Treasuries above their respective price levels (described below) in order to definitively state the bull market in bonds is over.
As of present International bond funds have not been affected by the rise in rates as U.S. bond funds have. We are reassessing each of the bond funds within our models to determine their exposure to duration risk should rates outside the U.S. also begin to rapidly rise.
U.S. 10 year Treasury Yield
After rates bottomed in mid-2016 (bond prices peaked as they are inversely correlated), rates rapidly rose to resistance on the perception of future economic growth + inflation. Importantly, price resistance near 2.6% (which had contained yields for almost 4 years) was broken in early 2018. A key resistance level at 3.006% - 3.036% was broken 2 weeks ago and is an indication the bull market in U.S. bonds that began in 1981 is likely over. This is a very significant development we are watching closely to assess whether yield spillover from the U.S. is reflected in other world regional bond markets.
The initial measured move on this breakout targets 3.32% followed by an ultimate target of 4.736%. A move of this magnitude will be very detrimental to long duration bond funds and put stress on U.S. corporate borrowing rates (especially High Yield).
The initial measured move on this breakout targets 3.32% followed by an ultimate target of 4.736%. A move of this magnitude will be very detrimental to long duration bond funds and put stress on U.S. corporate borrowing rates (especially High Yield).
German 10 year Bund Yield
German 10 year treasury yields have remained confined below 0.92% since 2014 with a bottom of -0.19% achieved in June 2016. Since then rates have gradually climbed within a rising channel towards 0.92%.
Yields have pulled back since early 2018 and this past week remained below the weekly breakout level of 0.60% and just outside the rising channel. A weekly close above 0.93% and it is likely the bull market in German bonds is over. There is no indication at present to suggest such will occur but we are monitoring for such an event.
Yields have pulled back since early 2018 and this past week remained below the weekly breakout level of 0.60% and just outside the rising channel. A weekly close above 0.93% and it is likely the bull market in German bonds is over. There is no indication at present to suggest such will occur but we are monitoring for such an event.
Japanese 10 year Treasury Yield
Japan has been fighting deflation for decades and only recent unprecedented monetary policy by the BOJ appears to be having some effect upon deflation (and yields).
After bottoming at near -0.28% yields in mid 2016, a rapid rise to near 0.11% has held as resistance over the past 1 1/2 years. Yields have remained range-bound since (indicating deflation remains an ongoing problem in Japan) but a weekly close above 0.12% would likely indicate the bull market in Japanese bonds is over.
After bottoming at near -0.28% yields in mid 2016, a rapid rise to near 0.11% has held as resistance over the past 1 1/2 years. Yields have remained range-bound since (indicating deflation remains an ongoing problem in Japan) but a weekly close above 0.12% would likely indicate the bull market in Japanese bonds is over.
U.S. 30 year Treasury Yield
An extremely important longer-term chart we are watching is the yield on the U.S. 30 year treasury relative to its 100 month exponential moving average (red dotted line on the below chart going back to 1980) as well as the yield on the 10 year treasury with its 115 month EMA. As can be seen below, since the mid 1980's these moving average have acted as a cap on each attempted increase in yields.
Should any given month close with a yield higher than their respective moving average it would be strong confirmation the 35 year bull market in bonds is likely over.
* Note as of the end of Jan 2018 the 10 year yield (bottom chart) closed above its long term moving average. Should the 30 year Treasury (top chart) do so as well, it would be final confirmation the bull market in bonds has ended.
Should any given month close with a yield higher than their respective moving average it would be strong confirmation the 35 year bull market in bonds is likely over.
* Note as of the end of Jan 2018 the 10 year yield (bottom chart) closed above its long term moving average. Should the 30 year Treasury (top chart) do so as well, it would be final confirmation the bull market in bonds has ended.
Currencies
Below is a 12 month rolling return for the 6 currencies that make up the U.S. Dollar index. The U.S. Dollar index is a weighted geometric mean of the dollar's value relative to the 6 currencies in the following list:
Also shown in the below chart is the following for comparison purposes:
- Euro (EUR), 57.6% weight.
- Japanese yen (JPY) 13.6% weight.
- U.K. Pound sterling (GBP), 11.9% weight.
- Canadian dollar (CAD), 9.1% weight.
- Swedish krona (SEK), 4.2% weight.
- Swiss franc (CHF) 3.6% weight.
Also shown in the below chart is the following for comparison purposes:
- The U.S. Dollar Index to allow comparison to its constituents.
- The Australian Dollar (not a part of the USD Index) as it is a popular commodity currency.
1 Year Rolling Currency Performance
- Over the past 12 months rolling period the top performing major currency has been the Canadian dollar with the US Dollar Index the worst performing.
3 Month Rolling Currency Performance
- Over the past 3 month rolling period the top performing currency has been the US Dollar with the Swedish Krona lagging.
1 Month Rolling Currency Performance
- Over the past 1 month rolling period the top performing currency has been the US Dollar with the British Pound lagging.
Past Week Currency Performance
- Over the past week the Japanese Yen was the strongest performing major currency with the British Pound lagging.
U.S. Dollar: (Neutral Bias)
Commentary:
The USD index was up +0.63% over the past week. The USD struggled throughout 2017 and into early 2018 as growth indicators had remained stagnant, U.S. officials have complained about their "overvalued U.S. dollar", and rate expectation differentials between Central Banks began to narrow on gradual improvements in the Euro area economic data. However, over the past few months this process has reversed as weak economic data out of the Eurozone has been offset by strengthening data out of the U.S.
If would appear the USD has hit an inflection point and the next few weeks may determine its longer term direction.
Support / Resistance Levels (based upon close):
Weekly: 93.03 / 94.59
Monthly: 86.48 / 93.03
If would appear the USD has hit an inflection point and the next few weeks may determine its longer term direction.
Support / Resistance Levels (based upon close):
Weekly: 93.03 / 94.59
Monthly: 86.48 / 93.03
US Dollar Index Daily charts
The 1 year daily chart above shows the steady decline in the USD throughout 2017 on the back of "strong dollar" rhetoric out of the Trump administration (as they attempt to talk down the value of the USD) along with improving economic data out of Europe.
In early 2018 price dropped to a close of 88.51 and retested this level on 3 separate occasions. It remained confined to a trading range the past 3 months but broke out 5 weeks ago. It has risen quickly and is challenging important daily resistance @ 93.96-94.14. A daily close above 94.80 would confirm a bullish trend reversal in the USD.
In early 2018 price dropped to a close of 88.51 and retested this level on 3 separate occasions. It remained confined to a trading range the past 3 months but broke out 5 weeks ago. It has risen quickly and is challenging important daily resistance @ 93.96-94.14. A daily close above 94.80 would confirm a bullish trend reversal in the USD.
The 4 year daily chart above clearly shows the important daily close support for the USD over the past 3 years (91.88-93.15). Price closed back above this key level this past week and is approaching the 38.2% Fibonacci level from the 2017-2018 decline (94.15). It would be expected to experience resistance at that level.
Over the past week the USD closed above its short term trend 50 and 200 day moving averages.
(Short Term Bullish)
(Short Term Bullish)
US Dollar Index Weekly charts
The weekly chart shows the steady decline the USD index has experienced since topping out in Dec 2016. In late April 2018 it broke out of its weekly consolidation box and closed the week above the weekly downtrend line.
Price ended the week above the strong resistance of 93.03-93.18 which defined the previous consolidation zone. It closed the week above the intermediate term trend 20 and 65 week moving averages.
(Intermediate Term Bullish)
Price ended the week above the strong resistance of 93.03-93.18 which defined the previous consolidation zone. It closed the week above the intermediate term trend 20 and 65 week moving averages.
(Intermediate Term Bullish)
A longer term 20 year look-back at the USD shows the 91.66-92.28 weekly close area (thick RED line) has been a very significant bull/bear battle zone over the past 20 years (since 1998). The past week price closed above this significant price level. It continues to hold the uptrend line from the 2011 bottom.
US Dollar Index Monthly chart
For the month of May the US Dollar index has gained +2.73%.
For the past 16 months the USD has been in a steady decline. It broke its critical support at 92.63-93.03 in late 2017 and rapidly fell to find support at the 86.48-88.01 level. It has currently held that support.
Price closed April below the long term trend 10 month moving average maintaining the longer term bias as bearish until months end. It remains at the bottom of the lower bounds of its past 3 year range and is challenging to regain the previous monthly support @ 92.63-93.03.
(Long Term Bearish)
For the past 16 months the USD has been in a steady decline. It broke its critical support at 92.63-93.03 in late 2017 and rapidly fell to find support at the 86.48-88.01 level. It has currently held that support.
Price closed April below the long term trend 10 month moving average maintaining the longer term bias as bearish until months end. It remains at the bottom of the lower bounds of its past 3 year range and is challenging to regain the previous monthly support @ 92.63-93.03.
(Long Term Bearish)
Euro (Neutral Bias)
The Euro was down -1.09% over the past week. It has shown remarkable longer-term resilience given European political uncertainty (Brexit, Spain, Germany, Italy) but has begun to weaken due to slightly eroding economic growth metrics recently.
Support / Resistance Levels (based upon close):
Weekly: 116.07 / 121.58
Monthly: 116.45 /123.02
Support / Resistance Levels (based upon close):
Weekly: 116.07 / 121.58
Monthly: 116.45 /123.02
Euro Daily Charts
The Euro had remained confined between 104.96 and 116.04 on a daily closing basis for over 2 1/2 years. Over this period it had chopped above/below its 200 day moving average with very little price momentum but broke out of the trading range in late July 2017. It rapidly rose to 125 but lost momentum over the past several months.
On the daily chart price close the week above daily support @ 114.61-116.04. It closed the week below the short term trend 50 and 200 day moving averages.
(Short Term Bearish)
On the daily chart price close the week above daily support @ 114.61-116.04. It closed the week below the short term trend 50 and 200 day moving averages.
(Short Term Bearish)
Euro Weekly Chart
The weekly chart shows the Euro had remained range bound from January/2015-July/2017 between 104.52 and 114.62. A significant breakout occurred in the 2nd week of July when a weekly close above the trading range was established.
This past week the Euro remained above the 2 1/2 year trading range on a weekly close basis. It closed the week below the intermediate trend 20 week + 65 week moving averages. Technically the breakout pattern had a measured move target of 122.99-124.72 (target was achieved in early 2018 and the Euro has fallen significantly since). Resistance is 121.58 with support at 116.07.
(Intermediate Term Bearish)
This past week the Euro remained above the 2 1/2 year trading range on a weekly close basis. It closed the week below the intermediate trend 20 week + 65 week moving averages. Technically the breakout pattern had a measured move target of 122.99-124.72 (target was achieved in early 2018 and the Euro has fallen significantly since). Resistance is 121.58 with support at 116.07.
(Intermediate Term Bearish)
Euro Monthly
For the month of May the Euro has lost -3.51%. On a monthly closing basis it closed the month of April above the long term trend 10 month moving average and appears to be attempting to test its previous monthly close low @ 116.45.
(Long Term Bullish)
(Long Term Bullish)
UK Pound (Neutral Bias)
U.K. Pound Daily Chart
U.K. Pound Weekly Chart
U.K. Pound Monthly Chart
The UK Pound was down -1.19% over the past week. Clearly over the next year the ongoing Brexit transition process will dominate the movement of the Pound but since the beginning of 2017 it has shown impressive strength on improving UK economic performance.
This past week the Pound closed the week below its short term trend daily 50 +200 day moving averages and between the intermediate term trend 20 + 65 week moving averages. For the month of May it has lost -3.32% and closed the month of April above its long term 10 month moving average.
(Short Term Bearish)
(Intermediate Term Neutral)
(Long Term Bullish)
Support / Resistance Levels (based upon close):
Weekly: 132.94 / 136.76
Monthly: 133.09 / 139.17
This past week the Pound closed the week below its short term trend daily 50 +200 day moving averages and between the intermediate term trend 20 + 65 week moving averages. For the month of May it has lost -3.32% and closed the month of April above its long term 10 month moving average.
(Short Term Bearish)
(Intermediate Term Neutral)
(Long Term Bullish)
Support / Resistance Levels (based upon close):
Weekly: 132.94 / 136.76
Monthly: 133.09 / 139.17
Australian Dollar (Bearish Bias)
Australian Dollar Daily Chart
Australian Dollar Weekly Chart
Australian Dollar Monthly Chart
The Australian Dollar was up +0.59% over the past week. Price this past week price remained below the key weekly close price level of 77.26 price established as a consequence of the surprise RBA interest rate cut in late April, 2016 (which led to an 18 month consolidation). The Aussie dollar has been inconsistent the past 10 months as it has gyrated between support/resistance levels with no clear direction but this past week broke below the uptrend line from the Jan 2016 bottom.
For the month of May the Aussie dollar has gained +0.32%. It closed the week below the short term trend 50 + 200 day moving averages and below the intermediate term trend 20 + 65 week moving averages. It closed the month of April below the long term trend 10 month moving average and below the monthly close resistance @ 76.59.
(Short Term Bearish)
(Intermediate Term Bearish)
(Long Term Bearish)
Support / Resistance Levels (based upon close):
Weekly: 75.10 / 75.85
Monthly: 70.17 / 76.59
For the month of May the Aussie dollar has gained +0.32%. It closed the week below the short term trend 50 + 200 day moving averages and below the intermediate term trend 20 + 65 week moving averages. It closed the month of April below the long term trend 10 month moving average and below the monthly close resistance @ 76.59.
(Short Term Bearish)
(Intermediate Term Bearish)
(Long Term Bearish)
Support / Resistance Levels (based upon close):
Weekly: 75.10 / 75.85
Monthly: 70.17 / 76.59
Canadian Dollar (Bearish Bias)
Canadian Dollar Daily Chart
Canadian Dollar Weekly Chart
Canadian Dollar Monthly Chart
The Canadian dollar was down -0.77% over the past week. It closed the week below the short term trend 50 + 200 day moving averages and below the intermediate term trend 20 + 65 week moving averages. It continues to hold the weekly trendline begun at the Jan 2016 lows of 68.09.
For the month of May the Loonie has lost -1.09%. It continues to consolidate and closed the month of April below the long term trend 10 month moving average.
(Short Term Bearish)
(Intermediate Term Bearish)
(Long Term Bearish)
Support / Resistance Levels (based upon close)
Weekly: 77.77 / 79.67
Monthly: 74.42 / 79.67
For the month of May the Loonie has lost -1.09%. It continues to consolidate and closed the month of April below the long term trend 10 month moving average.
(Short Term Bearish)
(Intermediate Term Bearish)
(Long Term Bearish)
Support / Resistance Levels (based upon close)
Weekly: 77.77 / 79.67
Monthly: 74.42 / 79.67
Key Weekly Returns (week ending 25 May 2018):
|
Countries/Regions
World Equities ACWI (iShares MSCI ACWI Index Fund) North American Equities SPY (S&P 500 SPDRs) QQQ (PowerShares QQQ Trust) IWM (Russell 2000 iShares) EWC (Canada iShares) |
Characteristics
World Equity Fund U.S. Large Cap S&P 500 Index U.S. NASDAQ 100 Fund U.S. Russell 2000 Small Cap Fund Canada |
Week % Change
-0.33% +0.30% +1.35% -0.08% -1.30% |
Non-North America Equities
|
VGK (Vanguard European VIPERs) EPP (iShares MSCI Pacific ex-Japan ) EWJ (Japan iShares) EEM (iShares MSCI Emerging Markets) ILF (Latin America 40 Index iShares) Bonds
BND (Vanguard Total U.S. Bond Market) BNDX (Vanguard International Bond ETF) TIP (iShares Barclays TIPS Bond Fund) PCY (PowerShares Emerging Markets Debt Portfolio) |
Europe/U.K Pacific ex-Japan (inc. Australia) Japan Emerging Markets Latin America US Total Bond (44% Gov't Tsy, 56%Corp) World Investment Grade Bonds ex-US Inflation Protected Gov't Bonds Emerging Market Sovereign Debt |
-1.79% -0.00% -1.44% +0.78% -2.83% +0.75% +0.24% +0.54% +1.56% |
|
Commodities
DBC (DB Commodities Tracking Index Fund) DBA (PowerShares DB Agriculture Fund) GLD (SPDR Gold Trust Shares) SLV (iShares Silver Trust) DBB (PowerShares Metals Fund) USO (United States Oil Fund) |
Commodity Basket Soft Commodity Basket Gold Bullion Silver Bullion Industrial Metals Light Crude Oil |
-0.72% +2.60% +0.65% +0.32% -0.21% -5.20% |
Currencies
|
UUP (PowerShares DB US Dollar Bullish Fund)
FXA (Currency Shares Australian Dollar Trust) FXB (Currency Shares British Pound Sterling Trust) FXC (Currency Shares Canadian Dollar Trust) FXE (Currency Shares Euro Trust) FXY (Currency Shares Japanese Yen Trust) |
U.S. Dollar
Australian Dollar U.K. Sterling Canadian Dollar Euro Japanese Yen |
+0.65%
+0.50% -1.25% -0.71% -0.92% +1.14% |
Charts of the Week
Commodity Basket Index
An alarming development into mid-Jan 2017 was the large decline in commodity prices. For the past 4 years the deflationary debt overhang has gripped world economies and equity markets have run up on the "hope" a return to world growth would begin soon. This would typically be reflected in a rise in commodity prices indicating inflation has begun to return.
Commodities (as measured by the Reuters/Jefferies CRB index) bottomed in early 2016 (along with equities) but have been unable to break above very strong resistance as shown on the below chart. In order to confirm world growth is firming we would like to see commodities moving higher.
This past week price closed the week above the Oct 2015 peak and within an up-trending channel from June 2017. This remains a very bullish development signaling world growth is accelerating.
Commodities (as measured by the Reuters/Jefferies CRB index) bottomed in early 2016 (along with equities) but have been unable to break above very strong resistance as shown on the below chart. In order to confirm world growth is firming we would like to see commodities moving higher.
This past week price closed the week above the Oct 2015 peak and within an up-trending channel from June 2017. This remains a very bullish development signaling world growth is accelerating.
Equity Market Volatility
The equity market decline in late Jan 2018 is very similar to that experienced in Aug 2015. We have included our monitor chart of S&P 500 volatility for the current period with the 2015 event below (used as a potential template).
As of this weeks market close volatility remained at levels which have in the past signaled an "all-clear (VIX:VXV ratio < 0.93). It is important to note the level of volatility is significantly below the early Feb spike. This is encouraging.
This does not preclude further volatility (as was experienced in 2015) but it indicates the highest levels of volatility (and potential equity market declines) have probably ended.
As of this weeks market close volatility remained at levels which have in the past signaled an "all-clear (VIX:VXV ratio < 0.93). It is important to note the level of volatility is significantly below the early Feb spike. This is encouraging.
This does not preclude further volatility (as was experienced in 2015) but it indicates the highest levels of volatility (and potential equity market declines) have probably ended.
Volatility Event 2018
Volatility Event 2015
European Equities
Since the 2009 market bottom Europe has been the weakest major equity growth region. As such, we continue to monitor the Euro Stoxx 50 and Stoxx 600 for indications of improving performance out of Europe.
The past week the European Stoxx 50 index remained above the important support @ 2922-2977 while the Stoxx 600 index remained above the 348-351 price level. Both indexes remain key components of a continued world equity market advance and recent weakness in Europe is concerning.
The past week the European Stoxx 50 index remained above the important support @ 2922-2977 while the Stoxx 600 index remained above the 348-351 price level. Both indexes remain key components of a continued world equity market advance and recent weakness in Europe is concerning.
Chinese Equities
The Shanghai Composite index was lower this past week. It remains above key support (3052-3103) but below its rising trend channel from the Jan 2016 lows. We would like to see significant strength return to China further indicating world economic growth continues to increase but currently there is little evidence of a significant change in China's economic performance. This remains a concern we are monitoring.
Elliott Wave
We use Elliott Wave theory in conjunction with cycle analysis to attempt to "crystal ball" what to expect going forward. We have included some basic information below for those who might be interested followed by our current interpretation/analysis.
The Elliott wave principle is a form of technical analysis that some traders use to analyze financial market cycles and forecast market trends by identifying extremes in investor psychology, highs and lows in prices, and other collective factors. Ralph Nelson Elliott (1871–1948), a professional accountant, discovered the underlying social principles and developed the analytical tools in the 1930s. He proposed that market prices unfold in specific patterns, which practitioners today call Elliott waves, or simply waves. Elliott published his theory of market behavior in the book The Wave Principle in 1938, summarized it in a series of articles inFinancial World magazine in 1939, and covered it most comprehensively in his final major work, Nature’s Laws: The Secret of the Universe in 1946. Elliott stated that "because man is subject to rhythmical procedure, calculations having to do with his activities can be projected far into the future with a justification and certainty heretofore unattainable."
The Elliott Wave Principle posits that collective investor psychology, or crowd psychology, moves between optimism and pessimism in natural sequences. These mood swings create patterns evidenced in the price movements of markets at every degree of trend or time scale.
In Elliott's model, market prices alternate between an impulsive, or motive phase, and a corrective phase on all time scales of trend, as the illustration shows. Impulses are always subdivided into a set of 5 lower-degree waves, alternating again between motive and corrective character, so that waves 1, 3, and 5 are impulses, and waves 2 and 4 are smaller retraces of waves 1 and 3. Corrective waves subdivide into 3 smaller-degree waves starting with a five-wave counter-trend impulse, a retrace, and another impulse.
In a bear market the dominant trend is downward, so the pattern is reversed—five waves down and three up. Motive waves always move with the trend, while corrective waves move against it.
In Elliott's model, market prices alternate between an impulsive, or motive phase, and a corrective phase on all time scales of trend, as the illustration shows. Impulses are always subdivided into a set of 5 lower-degree waves, alternating again between motive and corrective character, so that waves 1, 3, and 5 are impulses, and waves 2 and 4 are smaller retraces of waves 1 and 3. Corrective waves subdivide into 3 smaller-degree waves starting with a five-wave counter-trend impulse, a retrace, and another impulse.
In a bear market the dominant trend is downward, so the pattern is reversed—five waves down and three up. Motive waves always move with the trend, while corrective waves move against it.
Wave 1 (I): Wave one is rarely obvious at its inception. When the first wave of a new bull market begins, the fundamental news is almost universally negative. The previous trend is considered still strongly in force. Fundamental analysts continue to revise their earnings estimates lower; the economy probably does not look strong. Sentiment surveys are decidedly bearish, put options are in vogue, and implied volatility in the options market is high. Volume might increase a bit as prices rise, but not by enough to alert many technical analysts.
Wave 2 (II): Wave two corrects wave one, but can never extend beyond the starting point of wave one. Typically, the news is still bad. As prices retest the prior low, bearish sentiment quickly builds, and "the crowd" haughtily reminds all that the bear market is still deeply ensconced. Still, some positive signs appear for those who are looking: volume should be lower during wave two than during wave one, prices usually do not retrace more than 61.8% (see Fibonacci section below) of the wave one gains, and prices should fall in a three wave pattern.
Wave 3 (III): Wave three is usually the largest and most powerful wave in a trend (although some research suggests that in commodity markets, wave five is the largest). The news is now positive and fundamental analysts start to raise earnings estimates. Prices rise quickly, corrections are short-lived and shallow. Anyone looking to "get in on a pullback" will likely miss the boat. As wave three starts, the news is probably still bearish, and most market players remain negative; but by wave three's midpoint, "the crowd" will often join the new bullish trend. Wave three often extends wave one by a ratio of 1.618:1.
Wave 4 (IV): Wave four is typically clearly corrective. Prices may meander sideways for an extended period, and wave four typically retraces less than 38.2% of wave three (see Fibonacci relationships below). Volume is well below than that of wave three. This is a good place to buy a pull back if you understand the potential ahead for wave 5. Still, fourth waves are often frustrating because of their lack of progress in the larger trend.
Wave 5 (V): Wave five is the final leg in the direction of the dominant trend. The news is almost universally positive and everyone is bullish. Unfortunately, this is when many average investors finally buy in, right before the top. Volume is often lower in wave five than in wave three, and many momentum indicators start to show divergences (prices reach a new high but the indicators do not reach a new peak). At the end of a major bull market, bears may very well be ridiculed (recall how forecasts for a top in the stock market during 2000 were received).
Wave A: Corrections are typically harder to identify than impulse moves. In wave A of a bear market, the fundamental news is usually still positive. Most analysts see the drop as a correction in a still-active bull market. Some technical indicators that accompany wave A include increased volume, rising implied volatility in the options markets and possibly a turn higher in open interest in related futures markets.
Wave B: Prices reverse higher, which many see as a resumption of the now long-gone bull market. Those familiar with classical technical analysis may see the peak as the right shoulder of a head and shoulders reversal pattern. The volume during wave B should be lower than in wave A. By this point, fundamentals are probably no longer improving, but they most likely have not yet turned negative.
Wave C: Prices move impulsively lower in five waves. Volume picks up, and by the third leg of wave C, almost everyone realizes that a bear market is firmly entrenched. Wave C is typically at least as large as wave A and often extends to 1.618 times wave A or beyond.
Wave 2 (II): Wave two corrects wave one, but can never extend beyond the starting point of wave one. Typically, the news is still bad. As prices retest the prior low, bearish sentiment quickly builds, and "the crowd" haughtily reminds all that the bear market is still deeply ensconced. Still, some positive signs appear for those who are looking: volume should be lower during wave two than during wave one, prices usually do not retrace more than 61.8% (see Fibonacci section below) of the wave one gains, and prices should fall in a three wave pattern.
Wave 3 (III): Wave three is usually the largest and most powerful wave in a trend (although some research suggests that in commodity markets, wave five is the largest). The news is now positive and fundamental analysts start to raise earnings estimates. Prices rise quickly, corrections are short-lived and shallow. Anyone looking to "get in on a pullback" will likely miss the boat. As wave three starts, the news is probably still bearish, and most market players remain negative; but by wave three's midpoint, "the crowd" will often join the new bullish trend. Wave three often extends wave one by a ratio of 1.618:1.
Wave 4 (IV): Wave four is typically clearly corrective. Prices may meander sideways for an extended period, and wave four typically retraces less than 38.2% of wave three (see Fibonacci relationships below). Volume is well below than that of wave three. This is a good place to buy a pull back if you understand the potential ahead for wave 5. Still, fourth waves are often frustrating because of their lack of progress in the larger trend.
Wave 5 (V): Wave five is the final leg in the direction of the dominant trend. The news is almost universally positive and everyone is bullish. Unfortunately, this is when many average investors finally buy in, right before the top. Volume is often lower in wave five than in wave three, and many momentum indicators start to show divergences (prices reach a new high but the indicators do not reach a new peak). At the end of a major bull market, bears may very well be ridiculed (recall how forecasts for a top in the stock market during 2000 were received).
Wave A: Corrections are typically harder to identify than impulse moves. In wave A of a bear market, the fundamental news is usually still positive. Most analysts see the drop as a correction in a still-active bull market. Some technical indicators that accompany wave A include increased volume, rising implied volatility in the options markets and possibly a turn higher in open interest in related futures markets.
Wave B: Prices reverse higher, which many see as a resumption of the now long-gone bull market. Those familiar with classical technical analysis may see the peak as the right shoulder of a head and shoulders reversal pattern. The volume during wave B should be lower than in wave A. By this point, fundamentals are probably no longer improving, but they most likely have not yet turned negative.
Wave C: Prices move impulsively lower in five waves. Volume picks up, and by the third leg of wave C, almost everyone realizes that a bear market is firmly entrenched. Wave C is typically at least as large as wave A and often extends to 1.618 times wave A or beyond.
S&P 500 Weekly Chart
For those who are new to Elliott wave, it is essential to understand as market participant psychology changes (and, as a consequence, the various waves unfold in specific patterns) objective analysis requires readjustment of counts as the waves unfold. Elliott wave is not a "crystal ball" but more a quantitative tool to analyze changes in market psychology as market conditions evolve. Elliott wave analysis can be quite confusing and intricate but in our experience we find it is best used as a "road map" towards the bigger picture.
Above is the current long term view of the bull market from 2004. Clearly the 2008-2009 market decline was of such stature as to be historic. Given such, we have begun to think out of the box with respect to Elliott Wave as it has recently progressed.
In broadest terms markets cycle through "grand super-cycles" lasting generations (generally coinciding with generational demographics). If one were to use the end of the 1929-1932 market crash as the start point for a new super-cycle, it could be argued a Grand Supercycle began in 1932 with a 5 wave super-cycle advance occurred between 1932 and 2000 (68 years in length) followed by a 3 year super-cycle A-B-C decline during the period 2000-2009 (9 years in length culminating in the 2nd worst market decline since the great depression from 2007-2009). If this is the case we would have completed a full Elliott Wave Grand Supercycle pattern (5 wave advance with a 3 wave decline) from 1932-2009 and have embarked on a new multi-generational Grand Supercycle beginning in March 2009.
We have marked this super-cycle on the below chart with the 68 year SC-1 through to the SC-5 advance (1932-2000) followed by the 9 year SC-A, SC-B, and SC-C decline (2000-2009). If this is the case, an argument can be made the period 2009-2017 is only the 1st bull market wave SC-1 advance within a still young new 77+ period super-cycle.
Above is the current long term view of the bull market from 2004. Clearly the 2008-2009 market decline was of such stature as to be historic. Given such, we have begun to think out of the box with respect to Elliott Wave as it has recently progressed.
In broadest terms markets cycle through "grand super-cycles" lasting generations (generally coinciding with generational demographics). If one were to use the end of the 1929-1932 market crash as the start point for a new super-cycle, it could be argued a Grand Supercycle began in 1932 with a 5 wave super-cycle advance occurred between 1932 and 2000 (68 years in length) followed by a 3 year super-cycle A-B-C decline during the period 2000-2009 (9 years in length culminating in the 2nd worst market decline since the great depression from 2007-2009). If this is the case we would have completed a full Elliott Wave Grand Supercycle pattern (5 wave advance with a 3 wave decline) from 1932-2009 and have embarked on a new multi-generational Grand Supercycle beginning in March 2009.
We have marked this super-cycle on the below chart with the 68 year SC-1 through to the SC-5 advance (1932-2000) followed by the 9 year SC-A, SC-B, and SC-C decline (2000-2009). If this is the case, an argument can be made the period 2009-2017 is only the 1st bull market wave SC-1 advance within a still young new 77+ period super-cycle.
Should this be the case, it would indicate the period 2009-2015 was a Cycle wave I followed by a short and shallow Cycle wave II decline into Feb 2016. If this is such, it would indicate a new Cycle wave III began in Feb 2016. This would be a much more bullish count and project much higher equity values.
However, we are still keeping our original EWT weekly chart below with "classic" indications we are within the ending stages of the 2009-present bull market (with projected Fibonacci Wave extension targets for the Primary Wave V top as shown.
However, we are still keeping our original EWT weekly chart below with "classic" indications we are within the ending stages of the 2009-present bull market (with projected Fibonacci Wave extension targets for the Primary Wave V top as shown.
- Note we have now exceeded the 50% Fibonacci extension target range of 2439-2489. The target to end the bull market now becomes the 61.8% Fibonacci extension range of 2977-3042.
As we ended 2017 we remained torn between the 2 Elliott Wave counts (which centers upon whether the market decline between mid 2015-early 2016 was a bear market or not). It "technically" did not decline 20% on the S&P 500 (but did exceed a 20% decline on other indices) so we are left with 2 possibilities:
The difference between the 2 counts is either a 10-15% pullback (in the 1st case) or a 50-60% bear market decline (in the 2nd case). Only once the decline has begun will be able decipher which count is correct but in both cases it indicates we are near a market top (either a short term top or a major top).
- The 1st chart indicates we have perhaps several years to go to complete the current bull market (which would have begun in Feb 2016) as we are now nearing the top of Primary Wave III of a five wave advance. We would expect a Primary Wave IV (down) followed by a Primary Wave V (up) to complete the bull market cycle.
- The 2nd chart count begins the bull market in Mar 2009 and is now completing Wave V of a 5 wave advance. If this count is correct the bull market is very near its end.
The difference between the 2 counts is either a 10-15% pullback (in the 1st case) or a 50-60% bear market decline (in the 2nd case). Only once the decline has begun will be able decipher which count is correct but in both cases it indicates we are near a market top (either a short term top or a major top).
Irrespective of the weekly count, the above daily chart shows a Wave IV triangle formation forming from the Jan 2018 top. The triangle should take the form of an a-b-c-d-e followed by an advance to the Wave V peak above the Jan 2018 highs (currently forecast to be 2977-3042). Once completed, the bear market will begin.
Market Valuation
U.S. (NYSE) Margin Debt
We have been studying with interest the current margin debt on US markets. For those who are unfamiliar, margin debt is the amount of "loans" taken out by market speculators to leverage up their equity positions. During normal bull markets margin debt will increase as the market continues to climb. This increased margin debt amplifies equity market prices. However, at some point speculators become nervous and begin to reduce their margin positions. This reduction in margin is like letting the air out of a balloon and deflates equity asset prices.
As can be seen on the below graphic, both the 2000 and 2007 market tops were signaled in advance by tops in margin debt (margin debt not inflation adjusted on this chart):
As can be seen on the below graphic, both the 2000 and 2007 market tops were signaled in advance by tops in margin debt (margin debt not inflation adjusted on this chart):
The following chart (source: Doug Short) shows US equity margin debt adjusted for inflation. As can be seen, in both 2000 and 2007 inflation-adjusted margin debt peaked and then began to decline leading to the tops in the S&P 500 index. As such, margin debt rollovers acts as a good lead indicator of possible future market weakness.
As of the end of April 2018 US margin debt declined modestly which is currently acting as a headwind for equities.
U.S. Equity market Valuation Models (data as of 30 April 2018)
(Source: D. Short)
Below is a graph representing 4 different long-term valuation measures plotted back to 1900:
As of 31 March 2018 the average of these 4 measures places the U.S. stock market (S&P 500 index) as being 110% overvalued relative to its long term mean. This is the 2nd highest valuation in the history of the stock market going back to 1900. This level is well over 2 standard deviations above the mean and above the market peaks in both 2007 and 1929. It is only surpassed by the 2000 dotcom bubble peak.
- The Crestmont Research P/E Ratio
- The cyclical P/E ratio using the trailing 10-year earnings as the divisor
- The Q Ratio, which is the total price of the market divided by its replacement cost
- The relationship of the S&P Composite price to a regression trendline
As of 31 March 2018 the average of these 4 measures places the U.S. stock market (S&P 500 index) as being 110% overvalued relative to its long term mean. This is the 2nd highest valuation in the history of the stock market going back to 1900. This level is well over 2 standard deviations above the mean and above the market peaks in both 2007 and 1929. It is only surpassed by the 2000 dotcom bubble peak.
Another popular valuation metric is know as the "Buffett Indicator". In an interview with Fortune magazine back in 2001 Warren Buffett remarked "it is probably the best single measure of where valuations stand at any given moment."
The indicator measures the price of Corporate Equities (Mkt Cap) to Gross Domestic Product (GDP) as a ratio going back to the 1950's. As can be seen below, the ratio of equity prices relative to GDP currently stands at 142.1%. It has exceeded the recent 2015 peak of 128.9% and is second only to the 2000 equity peak of 151.3% in terms of equity overvaluation relative to economic output.
The de-trended graph indicates it would take a 49% market decline to return valuations back to the long term regression line (shown in red on the 1st chart). This would be our minimum expected decline when the next bear market begins.
7-Year Asset Class Real Return Forecast (as of 30 April 2018)
(Source: GMO LLC)
(Source: GMO LLC)
Each month GMO (Grantham, Mayo, Van Otterloo & Co.) publishes a forward forecast for expected annual real rates of return (i.e. inflation adjusted) for a number of different asset classes with a 7 year forward outlook. They have historically had a very good track record (0.97 correlation) of estimating forward 7 year asset class returns based primarily upon current valuations combined with mean reversion. Charts are published following analysis of the previous months data.
I have followed GMO's methodology with interest for many years. In my experience I have found them to be conservative over the shorter term with a tenancy to make calls too early. HOWEVER, similar to Dr. John Hussman of Hussman Funds, they also tend to be right over the longer term. As such, I use their outlook as part of the valuation model within the ECAM 5 Factor model.
Above is their current forecast of expected real returns (after inflation) for the next 7 years broken down by asset class. It is clear based upon current market valuations GMO forecasts well below average annual investment returns in all asset classes with a 7 year forward time horizon (the dotted line is the historical real return of U.S. equities of +6.5% per year). This is important for those who may be soon retiring and expecting "average" returns on their equity and bond investments over the next 7 years. Current high market valuations make it a certainty forward returns over the next 7-10 years will be well below historical averages.
I have followed GMO's methodology with interest for many years. In my experience I have found them to be conservative over the shorter term with a tenancy to make calls too early. HOWEVER, similar to Dr. John Hussman of Hussman Funds, they also tend to be right over the longer term. As such, I use their outlook as part of the valuation model within the ECAM 5 Factor model.
Above is their current forecast of expected real returns (after inflation) for the next 7 years broken down by asset class. It is clear based upon current market valuations GMO forecasts well below average annual investment returns in all asset classes with a 7 year forward time horizon (the dotted line is the historical real return of U.S. equities of +6.5% per year). This is important for those who may be soon retiring and expecting "average" returns on their equity and bond investments over the next 7 years. Current high market valuations make it a certainty forward returns over the next 7-10 years will be well below historical averages.
12-Year US Equity Real Return Forecast
(Source: Hussman Funds)
(Source: Hussman Funds)
S&P 500 12 year forward projected annual returns (Mkt Cap-GVA)
S&P 500 12 year forward projected annual returns (margin-adjusted CAPE)
Balanced Portfolio 12 year forward projected annual returns
(60% in the S&P 500, 30% in Treasury bonds, and 10% in Treasury bills)
(60% in the S&P 500, 30% in Treasury bonds, and 10% in Treasury bills)
Dr. John Hussman uses a unique measure of estimating future equity returns over a 12 year period based upon market capitalization relative to gross corporate value added. He claims the measure has a 91.9% correlation to actual S&P 500 future returns over a 12 year horizon. As per his previous explanations:
"Across the scores of measures I’ve evaluated or created over three decades of research, the ratio of non-financial market capitalization to corporate gross value added (essentially corporate revenues, including estimated foreign revenues, excluding double-counting of intermediate inputs) is best correlated to actual subsequent market returns over a 10-12 year horizon".
As can be seen on the above chart, since 1950 his approach has correlated quite closely with future returns (blue line is his estimates and the red line the subsequent returns 12 years later). Currently his calculations project a "buy and hold" rate of return on the S&P 500 index of -0.6% nominal per year out to 2028 should one employ a "buy and hold" strategy. Clearly tactical asset allocation will be required as we transition to the back half of the current market cycle.
His recent conclusion:
" At present, the valuation measures that we find best correlated with actual subsequent S&P 500 total returns are at the most offensive levels in history, matching or eclipsing the 1929 and 2000 extremes. Even considering the level of interest rates, economic growth, and other factors, the S&P 500 currently stands about 2.8 times the level that we believe the index will revisit over the completion of the current market cycle, implying an interim market loss something on the order of -64%. Moreover, the most reliable valuation measures uniformly imply the likelihood of negative total returns in the S&P 500 over the coming 10-12 year period."
Clearly the high level of current market valuations does not bode well for the "buy and hope" investor.
"Across the scores of measures I’ve evaluated or created over three decades of research, the ratio of non-financial market capitalization to corporate gross value added (essentially corporate revenues, including estimated foreign revenues, excluding double-counting of intermediate inputs) is best correlated to actual subsequent market returns over a 10-12 year horizon".
As can be seen on the above chart, since 1950 his approach has correlated quite closely with future returns (blue line is his estimates and the red line the subsequent returns 12 years later). Currently his calculations project a "buy and hold" rate of return on the S&P 500 index of -0.6% nominal per year out to 2028 should one employ a "buy and hold" strategy. Clearly tactical asset allocation will be required as we transition to the back half of the current market cycle.
His recent conclusion:
" At present, the valuation measures that we find best correlated with actual subsequent S&P 500 total returns are at the most offensive levels in history, matching or eclipsing the 1929 and 2000 extremes. Even considering the level of interest rates, economic growth, and other factors, the S&P 500 currently stands about 2.8 times the level that we believe the index will revisit over the completion of the current market cycle, implying an interim market loss something on the order of -64%. Moreover, the most reliable valuation measures uniformly imply the likelihood of negative total returns in the S&P 500 over the coming 10-12 year period."
Clearly the high level of current market valuations does not bode well for the "buy and hope" investor.
Global Asset Class 10-year Expected Return Forecast (as of 30 April 2018)
(Source: Research Affiliates)
(Source: Research Affiliates)
Cycle Commentary
At left is a 20 year chart of the monthly performance of the S&P 500 index (1998-2017) showing seasonal rates of return by month.
On the chart the top number is the percentage of months in which the market closed higher than it opened and at the bottom is the average % return by month.
As can be seen, over the past 20 years the period October-April yearly offers the highest potential return (cumulative +8.0% average return) while the period May-September offers little in total return (-2.2% cumulative average return).
On the chart the top number is the percentage of months in which the market closed higher than it opened and at the bottom is the average % return by month.
As can be seen, over the past 20 years the period October-April yearly offers the highest potential return (cumulative +8.0% average return) while the period May-September offers little in total return (-2.2% cumulative average return).
In the interest of moving more towards recent market action, below is the past 10 years monthly returns for the S&P 500 index ($SPX), the Dow Jones Industrial index ($INDU), the NASDAQ Composite index ($COMPQ) and the Dow Jones World index ($DJW).
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S&P 500 Seasonality (historical 50 year look-back annual seasonality)
"Turning to the months ahead, the performance for January and February is rather lacklustre compared to the months that bookend this start of year period. The S&P 500 Index has gained an average of 0.8% and 0.2%, respectively in the first two months of the year, based on the past 50 periods. These months are easily the weakest of the best six month trend for stocks. The large-cap benchmark has closed positive just over half of the time (56%) in January and February, making this winter lull little better than a flip of a coin in terms of the frequency of success.. Returns for January have ranged from a loss of 8.6% in 2009 to a gain of 13.2% in 1987. Performance tends to gyrate in the middle of January with the majority of the strength achieved in the first few days and last few days of the period".
Ned Davis Research 2018 Composite Model
Composite directional model forecast for the S&P 500 index based upon the following parameters:
- Decennial Cycle Year 7
- Presidential Cycle Year 1
- Annual Seasonal Cycle
U.S. 4 Year Presidential Election Cycle
*2018 is Year 2 (post-election year)*
As can be seen on the chart above, historically since 1928 the 2nd year of the 4 year Presidential Cycle tends to provide the worst returns of the 4 year cycle.
While we do not make investment decisions strictly based upon cycle analysis, we are cognizant of the historical nature of these cycles and tend to be a bit more wary as they approach.
While we do not make investment decisions strictly based upon cycle analysis, we are cognizant of the historical nature of these cycles and tend to be a bit more wary as they approach.
Presidential Cycle S&P 500 returns (inc. dividends):
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1988-Year 4: +12.40%
1989-Year1: +27.25% 1990-Year 2: -6.56% 1991-Year 3: +26.31% 1992-Year 4: +4.46% 1993-Year 1: +7.06% 1994-Year 2: -1.54% 1995-Year 3: +34.11% 1996-Year 4: +20.26% 1997-Year 1: +31.01% 1998-Year 2: +26.67% 1999-Year 3: +19.53% 2000-Year 4: -10.14% |
2001-Year 1: -13.04%
2002-Year 2: -23.37% 2003-Year 3: +26.38% 2004-Year 4: +8.99% 2005-Year 1: +3.00% 2006-Year 2: +13.62% 2007-Year 3: +3.53% 2008-Year 4: -38.49% 2009-Year 1: +23.45% 2010-Year 2: +12.78% 2011-Year 3: +0.00% 2012-Year 4: +13.41% 2013-Year 1: +29.60% |
2014-Year 2: +11.39%
2015-Year 3: -0.73% 2016-Year 4: +11.96% 2017-Year 1: +21.83% |