Category Archives: Markets

Global Equity Performance – What’s Driving the Divergence?

Posted on September 20, 2018 by Gemmer Asset

It’s no secret the U.S. equity market has dominated in terms of performance this year.     What’s interesting is how we got here. As you can see above, both US and international markets were essentially flat at the end of April after a bit of a roller coaster in the 1st quarter. Then the divergence began. Here’s how the performance breaks down:     Over the last 4+ months, the US has gone from…
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What Has Changed Since Lehman and What Lessons Have Been Learned?

Posted on September 19, 2018 by Gemmer Asset

Last week saw the 10-year anniversary of Lehman’s failure. In a way Lehman going under marked the point where the recession of 2008 turned into the Global Financial Crisis (GFC). For a moment everything stopped – would the system survive? Reputable figures were pulling hard cash out of the bank on Friday just in case it didn’t open on Monday. This was depression era type of stuff.   What Has Changed?   But it almost…
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Market Recap

Posted on September 14, 2018 by Gemmer Asset

  Is Growth and Inflation Softening at the Margin?   The equity markets were generally higher this week while bonds lost ground. For the week the S&P added +1.2% and small-caps gained +0.5%. The overseas markets also performed well with the EAFE up +2.0% and emerging +1.0%.   In general, the economic reports have been decent with growth a touch on the soft side and inflation moderating, at least for a month. Big picture wise,…
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Core Inflation Takes A Breather

Posted on September 13, 2018 by Gemmer Asset

This morning the Bureau of Labor Statistics (BLS) released CPI inflation data. It showed that Core Inflation (ex-food and energy) grew +2.2% year-over-year. This is down from the +2.4% economists expected and is the first time since 2017 that a Core CPI data point was lower than the previous month.     At risk of getting too deep into the weeds, I’ll only mention that today’s number appears to be the result of one particular…
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Today’s Jobs Report – Wage Growth Picks Up

Posted on September 7, 2018 by Gemmer Asset

Today’s jobs report was a solid one with nonfarm payrolls rising by 201k, higher than both the 190k surveyed by economists and the 157K of the previous month. The unemployment rate stayed put at 3.8%, but average hourly earnings (a measure of wage growth) came in at 2.9% growth year-over-year, a new cycle high as you can see below.     This report, and the positive headlines associated with it were overshadowed by the Trump…
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Should We Care About the Longest Bull Market?

Posted on August 27, 2018 by Gemmer Asset

If you follow the financial press it is hard not to notice all the noise around the duration of this bull market. The current rally is now officially the longest bull market in post-war history. We are finding it is hard to get too worked up about this.   First, the news. Last Wednesday the S&P set the record for the longest number of days without a 20% correction. A 20% decline is arbitrarily defined…
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Behavioral Biases

Posted on August 22, 2018 by Gemmer Asset

    “Our comforting conviction that the world makes sense rests on a secure foundation: our almost unlimited ability to ignore our ignorance.”   ― Daniel Kahneman, “Thinking, Fast and Slow”   Behavioral finance is a relatively new field. Part psychology, part finance, its practitioners have attempted to identify biases that individual investors have so they can be mindful of their effects when making investment decisions.   What I thought I’d do in this post…
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Market Recap

Posted on August 17, 2018 by Gemmer Asset

  August has a habit of throwing up surprises for investors. Those of a certain age might remember Augusts of 1998 (Russian default), 2007 (first redemption freeze of sub-prime crisis), 2011 (U.S. sovereign downgrade) and 2015 (renminbi devaluation/S&P 500 flash crash). The chart below shows the drawdowns in equities, EM assets, and hedge funds in each August going back to 1997.     This August is giving us another emerging market scare. The currencies of…
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‘90’s Flashback

Posted on August 15, 2018 by Gemmer Asset

  Ahhh, that takes me back to simpler times. Pets.com, flip phones, Netscape web browsers. Now while Prince’s song was referring to the world ending at the turn of the millennium, for emerging market investors the world actually came close to ending in 1997 and 1998. Both Thailand and Russia ran into some financial difficulties and Long-Term Capital Management managed to implode in an entertaining fashion. The Fed cut rates as a result and this…
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Do Liquid Alternatives Help A Portfolio’s Risk Adjusted Return?

Posted on August 14, 2018 by Gemmer Asset

I won’t beat around the bush, the answer to this question is, like many things, nuanced. It really depends on the alternative fund/vehicle you use. Obviously with hindsight we can pick the best fund, but its another story when you’re trying to make a judgement about whether or not an alternative fund will be additive to your portfolio ex-ante.   Morningstar came out with an interesting paper on this topic. In it, Jason Kephart attempts…
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