Author: WCM (Page 8 of 9)

WCM Chart of the Week for January 31, 2018

January 31, 2018 / WCM

The yield on the 10 Year US Treasury bond reached 2.72% today and has climbed over 65 basis points since early September 2017. This is not wholly unexpected given the strengthening of the US and world economies that has been building over the past several quarters. What we find interesting is that global government bond spreads (the difference between yields in the US and international markets) are staying persistently high, especially in the face of a weakening US dollar. The chart below shows spreads in the US versus comparable yields in the Eurozone, the United Kingdom and Japan going back two decades. US Treasury – Japanese Government Bond (JGBs) spreads have been historically wider, notably in the 2000s, while US Treasury spreads versus the UK (Gilts) and European equivalents are near all-time highs and significantly above 1.0% which served as an upper boundary.

It appears “something has to give” – either the US dollar strengthens, rates in the US recede or yields in Europe rise, thus closing the gap with US Treasury yields. We have our doubts that European economies can absorb materially higher rates even with welcomed improving economic trends.

WCM Chart of the Week for January 22, 2018

January 22, 2018 / WCM

Our key position in Asian emerging market equities faced headwinds towards the end of 2017 but appears to have regained lost ground over the past month. Many economies in Asia are export-oriented and many currencies, while not explicitly pegged to the US dollar, remain managed against the greenback. A weaker dollar against the major currencies could serve as a tailwind for Asian corporate earnings. Stronger global economic growth should buttress demand in the region and valuations remain favorable compared to developed markets. The fundamental case for emerging Asia is sound, but political risk from the Korean peninsula or rising interest rates and tighter monetary policy could place downward pressure on regional bourses.

WCM Chart of the Week for January 16, 2018

January 16, 2018 / WCM

Weakness in the US Dollar has been a focus of global investors as the greenback has weakened considerably versus the Euro and British pound. While the Japanese Yen has also strengthened against the US dollar over the course of the past several weeks, it doesn’t appear to have the strong momentum that the European currencies are exhibiting. The chart below shows the Euro – Yen cross rate, and the Euro has dominated the Yen for the better part of the past 12 months. Euro strength could prove a headwind for European equities in coming quarters, whereas Yen weakness could provide a boost for Japanese corporate earnings through the currency translation effect. Equities in these geographic regions tend to have a high degree of dependency on export markets and currency movements can have meaningful impact.

Technology leadership under pressure – WCM COTW Dec 5, 2017

December 5, 2017 / WCM

A key sector takes it on the chin…

The US technology sector has been a key leader in the US stock market for the past several years, and this year has been no exception. Yet, the past few weeks have seen a number of dominant technology companies’ stock prices stumbling while the broader market continues to rise. The sector has given back quite a bit of outperformance in a short period of time as the market appears to be rotating away from more growth-oriented toward more value-oriented sectors. The question remains whether the technology sector is simply consolidating outsized gains or does this truly mark a change in market leadership. Technology valuations are trading at a premium to the overall stock market, but not at historical extremes. So, for the time being we view the past few weeks as a healthy consolidation and we will continue to monitor this key position.

Cyber Monday Chart of the Week

November 27, 2017 / WCM

It appears that, after consolidating gains relative to global equities over the past several weeks, emerging market stocks are regaining momentum and market leadership. Emerging market equities, particularly in Asia, have many attractive traits including stronger economic and earnings growth as well as favorable valuation readings. Expectations of stronger economic activity in the developed world should also continue to be supportive of emerging market stocks going forward.

Thanksgiving Chart of the Week

November 21, 2017 / WCM

After trailing the developed equity markets of Europe, Asia and the Far East (EAFE) for much of the first three quarters of 2017, US stocks have outperformed so far this quarter. Part of international stock market outperformance was attributed to dollar weakness in the earlier part of the year. The dollar has now stabilized and that, along with continued improvement in economic conditions and a supportive fundamental backdrop, should be fuel for further stock market gains.

Have a great holiday week!

Announcing the WCM Charitable Fund

November 15, 2017 / WCM

With a great deal of excitement and pride during this giving season, we announce the launch of the WCM Charitable Fund in partnership with the Triskeles Foundation.

Every decision about how to deploy money is a capital allocation decision. Whether it is buying a house, investing in the markets, or making a philanthropic gift, our clients direct capital with intentionality and the expectation of a tangible and measurable result, whether it is making a home for family, growing wealth, or supporting good works in the community and the world at large. Even though the decision-making processes are similar, people rarely consider how their motivations for spending and investing might intersect with their motivations for giving and volunteering. Wilde Capital Management believes in the integration of a sense of purpose with both investing and charitable giving, and launched the WCM Charitable Fund to bring it all together.

Chart of the Week – Nov. 13 , 2017

November 13, 2017 / WCM

Volatility readings in the US, as measured by the VIX index, have been trending downward for the better part of two years. However, after reaching a 12-year low on September 29, the VIX or “fear gauge” has climbed over 18% in the past six weeks. Heightened volatility readings can be self-reinforcing and erode investor confidence. Eyes on this key market barometer.

Wilde Capital Management 2017 Outlook

January 4, 2017 / WCM

As we look forward to 2017, we see selective opportunities for positive returns across risk assets, with a continuing preference for the United States. Our optimism is tempered by the recognition that it is highly dependent on the actions of President-Elect Donald Trump and the Federal Reserve, and the growing influence of populism globally. In formulating our views, we continue to reflect on what dominated the headlines and drove markets over the past year. 2016 got off to a very rocky start with the MSCI World Index falling by 2 percent on the first day and U.S. equities recording the worst-ever start to a year. Concerns about the Chinese economy sent global markets into a tailspin. But at the risk of overusing a tired turn of phrase, it was a “tale of two markets” as trends reversed in the second half of the year, as investors moved past the surprising results of the Brexit referendum and Mr. Trump’s presidential victory to push indexes to new highs. To wit, several of these market drivers may prove to be prologue to what unfolds in the New Year.

Click here to read the full report: WCM 2017 Outlook

November 2016 Newsletter

December 2, 2016 / WCM

We have just published our monthly wrap-up with some post-US election observations about effects on the capital markets.

Investors witnessed a wide divergence in performance across capital markets in November. U.S. equities and segments of the commodity markets rose while most non-U.S. asset classes and bond markets within the U.S. declined.

Click here to read the newsletter.