Monday,
September 18, 2017 - Resilience is probably the quality that
best defines the current eight year bull market. Throughout this period,
markets have contended with a steady stream of destabilizing events, ranging
from escalating geopolitical conflicts to a slew of political, economic, and
humanitarian crises. Yet, despite suffering temporary pullbacks, equities have
continued to march upward and seemingly grow stronger with each passing
headwind or crisis.
This resilience was strikingly on display this week, as equities
rebounded from the previous week's decline and soared to record highs with the
DJIA, S&P 500 and Nasdaq advancing 2.2%, 1.6% and 1.4% respectively.
Investors began the week breathing a sigh of relief, as worst-case scenarios
over Hurricane Irma's economic damage failed to materialize. As these fears,
which had pressured stocks in previous week, abated, a relief rally took root
that remained firmly in place for the whole week. The Dow posted it's biggest weekly
gain of the year, with a stretch that included four consecutive record closes while the S&P 500 breached 2,500 and registered its best
week since January.
However, several alarming events belied this record setting week.
Tepid consumer spending data, economic fallout from two of the costliest and
most destructive hurricanes in U.S. history, ongoing policy uncertainty in
Washington, and continued North Korean saber-rattling and sharpening of
tensions on the Korean peninsula were among the risks that cropped up this
week. However, these seemingly inimical events to stock market gains and
optimism were all largely shrugged of by investors. As this week's market
action demonstrated, it will take a formidable matador to put an end to this
bull market.
ETFG Quant Movers - This week's top
Quant gainers include Vanguard Utilities ETF (VPU), Arrow QVM Equity
Factor ETF (QVM), WisdomTree Japan Hedged Dividend Growth Fund
(JHDG), PowerShares Preferred Portfolio (PGX), and Barclays ETN+
Shiller CAPETM ETN (CAPE) - their scores increased 11.45%, 10.98%, 10.14%,
9.96%, and 9.78% respectively. It's interesting to note that the iShares MSCI
South Korea Capped ETF (EWY) currently ranks among our top rated funds
according to our quant model. A closer look at EWY's score reveals that a large
driver of this high rating is it's strong behavioral score - another
illustration of the current disconnect between sentiment and risks in the
markets.
On the opposite end of the spectrum, our top Quant losers
were iPath S&P MLP ETN (IMLP), Vanguard Health Care ETF
(VHT), ETRACS Linked to the Wells Fargo Business Development Company Index
ETN (BDCS), Powershares Golden Dragon China Portfolio (PGJ),
and ETFMG Prime Cyber Security ETF (HACK) - shedding 11.09%, 10.51%,
9.00%, 8.68%, and 8.33% each.
Looking to the week ahead, developments surrounding North Korea
and the FOMC's decisions and outlook on the path of rate hikes and balance
sheet reduction will be in focus and pose the next series of challenges to the
current bull market.
Thank you for reading ETF Global Perspectives!
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