Market Commentary: The market kicked-off a new rally last week and established a strong follow-through today. For widely followed equity benchmarks such as the S&P 500 and the Dow Jones Industrial Average, it appears that the lows of last week constitute a successful retest of the August lows. It should be noted however, that it has been the Nasdaq and the international markets that have been providing the leadership for much of 2007, and the November pullback did not approach their August lows.
Investors are banking on another interest rate cut from the FOMC next week. Additionally, a word we haven’t heard in a couple of years – deflation – is now popping up in economic discussions. As a result, the 10-year Treasury yield finds itself back below 4% again, closing today at 3.91%.
Sectors: This past week produced an across-the-board improvement in our sector rankings, which now show half of the major sectors in positive intermediate-term trends. Relative strength is similar to last week and is exhibiting a definite bias toward defensive sectors such as Utilities, Consumer Staples, and Health Care.
Investors are banking on another interest rate cut from the FOMC next week. Additionally, a word we haven’t heard in a couple of years – deflation – is now popping up in economic discussions. As a result, the 10-year Treasury yield finds itself back below 4% again, closing today at 3.91%.
Sectors: This past week produced an across-the-board improvement in our sector rankings, which now show half of the major sectors in positive intermediate-term trends. Relative strength is similar to last week and is exhibiting a definite bias toward defensive sectors such as Utilities, Consumer Staples, and Health Care.
Styles: The global equity rally that kicked off a week ago improved the absolute strength of all style categories while producing little change in the relative rankings. The domestic market is clearly favoring Large Caps over Small Caps and Growth over Value.
International: China has bounced back into our top spot in the global rankings, signaling once again that it may be premature to declare the bursting of the China bubble. US-based investors with large positions in Canada are learning that currency translations work in both directions. For the first 10+ months of this year, Canadian equity investments were boosted by a 31% appreciation of the Canadian Dollar (often called the Loonie) versus the US Dollar. However, in the past four weeks, the Loonie has plunged more than 9% against the greenback, pushing Canada to the bottom of our global rankings in the process.
International: China has bounced back into our top spot in the global rankings, signaling once again that it may be premature to declare the bursting of the China bubble. US-based investors with large positions in Canada are learning that currency translations work in both directions. For the first 10+ months of this year, Canadian equity investments were boosted by a 31% appreciation of the Canadian Dollar (often called the Loonie) versus the US Dollar. However, in the past four weeks, the Loonie has plunged more than 9% against the greenback, pushing Canada to the bottom of our global rankings in the process.
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