The news has been relentless lately. There appears to be a never-ending stream of horrific tragedies, mismanaged relief efforts, and controversial political news. I’m beginning to loathe logging on in the morning to read the inevitable deluge of articles carefully crafted to make me feel as though the world is ending.
Yes, there are tragedies, there are geopolitical concerns, and there are those out there who disagree with my political views making decisions that affect my life that I disagree with. But there has to come a point, which may be the result of sheer exhaustion, where you cannot live your life angry and afraid. It seems that the market has learned this lesson.
Despite all of the recent news stories of domestic terrorism, escalating geopolitical concerns, and multiple natural disasters, the market was largely up for the week, with domestic equities hitting new highs even as this article is being written. There is good news in the market, and that seems to be taking precedence over the media’s and even Facebook’s portrayal of the world. Non-manufacturing activity is at its highest point in over a decade, and the most recent jobs report beat expectations. Additionally, it appears that the Fed chair expected to be chosen by President Trump early next year may be somewhat more dovish than anticipated.
As we move into the holiday season (Black Friday and all), I, for one, am ready to give thanks for the things I have rather than panic about how it’s being taken away from us a piece at a time. Take a hint from the market this week: things are OK, and the U.S. economy is on solid footing.
Sectors: The leading Sector Benchmark ETFs exhibited mostly positive shifts over the past week, with the average momentum score increasing from 11.8 to 15.1. Real Estate, Consumer Staples, and Utilities were the only sectors that fell. Utilities and Consumer Staples were both in the red for the week, highlighting a potential risk-on scenario as cyclicals such as Materials and Energy and Financials reach the top of the rankings. The spread between the highest and lowest increased from 34 to 38. This week, organization has appeared within the sector rankings, with cyclicals near the top of the rankings and defensive sectors near the bottom. Financials increased the most, up 12 points, while Utilities fell the most, down 5.
Factors: The leading Factor Benchmark ETFs rose in aggregate for the week, with the average momentum score increasing from 14.9 to 22.1. High Beta and Small Size remain in the lead, while Low Volatility and Dividend Growth sit at the bottom. The organization of momentum rankings suggests that the market has quite an appetite for risk, with the four highest-ranked factors also being the riskiest. The spread between top-ranked and bottom-ranked securities also increased from 14 to 26, suggesting conviction in these rankings.
Global: Rankings in the leading Global Benchmark ETFs were mostly positive. The average rank increased, though not as much as sector or factor exposures, increasing in average score from 18.2 to 21.1. Latin America and China remained at the top of the rankings, with China gaining significantly, taking the lead. Most momentum scores increased for the week. The only exceptions were Latin America, World Equity, and Pacific X-Japan. China increased the most, from 31 to 41, and the US came in second, increasing from 13 to 19. Pacific countries remain at the bottom of rankings.
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