Market Dominoes Might Be About to Fall

A Morgan Stanley index that tracks correlation among regions and assets classes has reached its peak, which may point to an enduring flight-to-safety by investors. This according to a recent article in Bloomberg. The index, which has reached its highest level since December 2016, reflects “a possible signal that the market’s defensive positioning could prove more lasting,” says Olivetree Financial executive director Tim Emmott. So far this year, the article says, flights to safety have… Read More

Sectors are Decoupling After Election

As the stock market rally continues to chug along in reaction to the Trump victory, sectors are shifting away from the lockstep movement that has been the norm over the last seven years, says The Wall Street Journal. Andrew Wilkinson, chief market analyst at Interactive Brokers, explains, “You’re seeing pressure on different sectors. In a typical bull market, you’re going to get all stocks going higher.” One of the more pronounced divergences is between financial… Read More

Markets Moving in Tandem is Unusual

Major markets are moving together more than usual which, given this period of high valuations, is raising concerns that even a slight pullback could cause significant, negative repercussions, according to a Wall Street Journal article from earlier this month. The article explains that investors have been “backing away in recent weeks from some of the year’s hottest trades” as gains in stocks, bonds, gold and low-volatility funds have started to reverse. The worry is that… Read More

Gold and Stocks on Different Paths

The inverse relationship between gold and stocks has never been this pronounced, according to an article in this week’s MarketWatch. However, it also references analysts’ opinions that the two may soon “be poised to rise together as both can benefit from low yields.” Motley Fool’s Sean Williams recently wrote that according to FactSet data, the negative correlation between gold futures and the stock market recently hit minus 0.63 (a factor of minus 1.0 would indicate… Read More