Today's Headlines

By , The Yomiuri Shimbun, 01/28/2015

MarketMinder's View: “Though the yen’s depreciation was expected to boost exports under the government’s scenario for economic growth, it is difficult to say tactics have progressed smoothly.” The excessive trade deficit mumbo-jumbo here misses the point—plenty of vibrant economies like America’s run trade and current account deficits. Rather, the notion we think you should take from this is that the weak yen hasn’t stimulated growth. And we didn’t expect it to, because in today’s globalized economy, few if any exports are entirely domestically produced. In Japan’s case, raw materials and energy products are heavy imports for industrial Japan, and a weak yen makes those input costs higher. Additionally, the same factors hit Japanese consumers. Weak, strong, whatever—currency valuations merely create winners and losers.

By , CNBC, 01/28/2015

MarketMinder's View: The allegedly scary thing is the possibility the ECB loses money on assets it purchases, either through interest rate fluctuations or an outright sovereign default. We would suggest this is wide of the mark. For one, contrary to the assertion in this piece, the ECB plan targets longer-term bonds, which aren’t at negative yields anywhere in the eurozone. Now then, if rates do rise, it’s true the ECB could take a loss. But should they do so, it’s not like you would get a financial panic—they could simply print more money. You might yelp, “That’s inflationary!” But that’s kind of the point of the ECB’s plan anyway. Now then, we agree ECB bond buying isn’t the right medicine for the eurozone, but it isn’t for any of the reasons included here, or for any of the reasons this piece lauds US quantitative easing (QE): QE, no matter which side of the Atlantic you are on, flattens the yield curve (the spread between short-term and long-term rates, and a proxy for bank lending’s profitability). A flat yield curve has never been shown to stimulate an economy, because less profitable bank lending likely means less plentiful money. A steep yield curve, on the other hand, has long been an indicator of positive economic growth ahead.

By , The Wall Street Journal, 01/28/2015

MarketMinder's View: The headline would be more accurate if it read, “Strong Dollar May Squeeze Some US Firms to Some Extent.” Consider: What about input costs for US firms that might import some intermediate goods or raw materials? For them, wouldn’t a strong dollar expand profits? Oh, and we’d suggest markets are well aware of the dollar’s strength. The likelihood it derails the bull market is exceptionally low, just as it didn’t when the dollar was quite strong in the 1990s.

By , The Telegraph, 01/28/2015

MarketMinder's View: Greek Prime Minister Alexis Tsipras’s new government is up and running, and some suggest it is poised to take a hard-line stance against its EU/IMF/ECB creditors, as evidenced by his nominating extremely anti-austerity cabinet ministers, ending privatizations and issuing rhetoric against EU foreign policy. But we would caution against reading a lot into the first three days of Tsipras’s government. This isn’t the first Greek government to start negotiations with the troika by saying they won’t just tuck their tail between their legs. History suggests concessions and comprises between Greece and its creditors are likely eventually. For more on Greece, see our 1/27/2015 commentary, “Greek Government Theatrics and Other Reruns.”

By , The Guardian, 01/28/2015

MarketMinder's View: We are highly skeptical a US $34 billion fiscal stimulus package is going to offset the massive hits the Russian economy has taken from having banks shut out of global capital markets due to sanctions, and from the government’s cash cow—Energy, which yields over half of Russia’s tax revenue—suffering from cratering oil prices. With all that said, the situation is likely confined to Russia, given the fact few other nations suffer from these same factors.

By , The Telegraph, 01/28/2015

MarketMinder's View: So the use of the yuan in international payments surged 102% to total less than 5% of global payments. That shows you that yes, China’s economy is ascending. But the common fear the yuan will overtake the dollar is so wide of the mark that it’s laughable. Plus, for the yuan’s climb to continue, the Chinese government will have to open its capital account to foreign cashflows, a very slow, long-term process. Ultimately, we guess a bigger Chinese economy with a more open capital account would be good not only for the yuan’s use internationally, but the global economy.


By , MarketWatch, 01/27/2015

MarketMinder's View: So this basically argues stocks in industries that aren’t cutting-edge like utilities or bank stocks outperform others, because the others’ valuations are bid up by investors seeking The Next Hot Thing. But who is to define boring? Were bank stocks boring in 2008? What about during the regional bank merger craze in the 1990s? There is no permanently superior industry, category, sector, size, style, country or individual company. Stocks aren’t boring or flashy. They are stocks.

By , Bloomberg, 01/27/2015

MarketMinder's View: So this all builds off a now-scrapped proposal included in President Obama’s State of the Union address last week to tax certain 529 plan college savings accounts, eliminating their current tax-shelter status, extrapolating this to mean all tax-advantaged savings accounts are at risk. Yet the 529 tax proposal didn’t even survive a week. The likelihood this or any administration succeeds in taxing Roth IRAs is exceedingly low. On a sensible note, as the article indicates, this shouldn’t really affect your saving behavior either way, because you know what? Living the retirement you want may require you to finance a good portion of it.

By , The Telegraph, 01/27/2015

MarketMinder's View: Total GDP growth slowed, but as this shows, it was largely due to a drop in construction. Services, which are about 80% of GDP, held steady at 0.8% q/q. Production fell -0.1%, but that drop was largely driven by energy production (e.g., North Sea oil)—manufacturing output rose 0.1%. While data on spending (consumers, business investment, trade etc.) won’t be available until the second estimate, this limited glimpse doesn’t seem to reveal a weakening UK economy.

By , Vox, 01/27/2015

MarketMinder's View: As ever, the CBO’s updated long-term economic and fiscal forecast has little (to no) use for investors. Its assumptions about debt, deficits and GDP are based on straight-line extrapolations of recent trends and reversion to historical means. It doesn’t and can’t account for the many things that could change between then and now, like economic cycles, interest rates, legislation and technology. It also uses flawed theory, like potential output—a textbook model that has little application to the real world. These issues are why the CBO’s long-term projections usually don’t have the best track record. Plus, even if they end up correct about far-future debt and growth this time, they can’t know whether higher debt will be unaffordable, which is what ultimately matters. America and Britain have shouldered much higher debt loads in the past because debt service was relatively cheap. Today, it’s super cheap.

By , MarketWatch, 01/27/2015

MarketMinder's View: We’re just a little confused by the parallel here, which compares today’s nor’easter with last year’s Polar Vortex, claiming the Fed couldn’t decide for months whether Q1 2014’s slowdown was solely weather-related and this indecision somehow impacted policy. Thing is, the Fed continued tapering quantitative easing bond purchases the whole time they were supposedly uncertain. So that doesn’t hold water. As ever, we wouldn’t waste time speculating about what the Fed might do or how they might adjust forward guidance. Their guidance is obtuse marketing spin, and their actions are unpredictable. Besides, the first rate hike in a tightening cycle has no history of turning bull markets into bears.

By , The Washington Post, 01/27/2015

MarketMinder's View: The plot of this alleged spy ring resembles cheap pulp fiction, save for one piece: Evidently, these supposed Russian operatives were investigating how they could use ETFs and stock trading algorithms to “destabilize markets.” This is driving fears of “algorithmic terrorism,” wherein foreign agents could supposedly cause another “flash crash” or worse. Now, this all sounds like a bad James Bond movie or episode of The Americans, but sometimes truth is stranger than fiction, so we guess it’s technically possible. But it’s highly improbable. Even if the bad guys could set a malevolent tradebot loose on the market, it would be one actor among millions. Other bots and humans would have arguably more influence. Also, stocks swiftly recovered from the flash crash—hence the name—making this all rather moot.

By , The New York Times, 01/27/2015

MarketMinder's View: Dodd-Frank required the SEC to write a rule ordering publicly traded firms to reveal the ratio of CEO pay to their median worker’s pay. Nearly five years on, the SEC is still hemming and hawing and appears to be watering the rule down quite a bit. Whether you love or hate the rule, this probably doesn’t make much difference. Median worker pay is difficult to calculate for all the reasons described here, and the statistic is subject to a lot of manipulation. Plus, the law’s aims were largely sociological. Investors wouldn’t gain much from this disclosure.

By , Bloomberg, 01/27/2015

MarketMinder's View: Here is what S&P downgrading Russia’s sovereign credit rating actually means: The fact that Russia is heavily oil dependent, currently a sanctioned pariah on international markets and very likely to enter recession has dawned on S&P. Considering Russia has enough forex reserves to cover 2015 debt maturities three times over, we’d suggest speculation of big credit market fallout or default are off base.

By , The Wall Street Journal, 01/27/2015

MarketMinder's View: This perhaps goes a bit too far and is too negative, in the sense that we’re fairly sure some politicians in Greece aren’t just “freeloading off of someone else,” but the history and story of business practices in Greece is an illuminating illustration of the competitiveness issues inherent in the Greek economy. And, this is a very entertainingly written article to boot.

By , The New York Times, 01/26/2015

MarketMinder's View: As expected, Alexis Tsipras’s Syriza party took Sunday’s Greek parliamentary election, though they narrowly missed winning an outright majority (and formed a coalition with a small right-leaning anti-bailout party). Some suggest the anti-austerity party winning risks renewed euro crisis, as their rhetoric could roil stocks or even result in Greece exiting the euro. However, we’d suggest this isn’t truly a game-changer for stocks. For one, not only is the outcome here the expected, Greece’s issues themselves are five years old, widely known, the country is too small to materially sway the global economy or markets and its troubles are mostly unique to Greece. Ultimately, it is highly likely Syriza’s campaign talk turns out like campaign talk in most countries: Lies and overstatements designed to curry voters’ favor. There is also no guarantee this government has staying power, given the ideological divergence of its members. Now, this article also oddly claims Tsipras’s demands are “unrealistic and rife with the potential to drive Greece to default” which is strange because Greece has already defaulted twice and a third isn’t a unique demand of Syriza’s. It has been openly discussed with lenders for months.

By , The Wall Street Journal, 01/26/2015

MarketMinder's View: Most of these are unrelated to investing—ways your brain can trick you into saving less and spending more. The one investment-related piece comes at the end, and it kind of misses the mark. It claims to address “overconfidence,” but what’s really at work in this anecdote is classic regret shunning—blaming any and everyone else for any investment decision that doesn’t work out. For instance, say Jim and Judy Investor buy a stock and it promptly tanks. They could see it as a learning experience and chance to evaluate their methods—that’s how you benefit from mistakes. Or, they could shun regret, as many people do. Say it’s the broker’s fault for recommending it. Or their neighbor Bob’s fault for hyping it up when he and Jim were golfing. Or the CEO’s fault for setting too-high expectations. The hypothetical client in this article blamed his portfolio’s 2008 losses on his financial adviser, rather than learning and accepting how the financial crisis blindsided most. Acting on these impulses was the root error here.

By , The Guardian, 01/26/2015

MarketMinder's View: By “running out of steam,” these forecasters mean they think GDP grew 0.6% q/q in Q4, all of 0.1 percentage point slower than Q3’s 0.7%. If that turns out to be true (first estimate hits this week), it’s awfully hasty to say Britain is losing steam. Economies never move in straight lines, and 2014 growth is still widely expected to be the fastest of this expansion. As for the “unbalanced” recovery chatter, which argues consumer-led growth is unsustainable and bad for Britain, there is no evidence this is true. A dominant service sector is a hallmark of most advanced, evolved economies. Manufacturing powerhouse China has said it would love to have a robust service sector leading growth. That folks broadly see a positive—robust service sector growth—as a negative for Britain suggests sentiment there remains too dour.

By , Project Syndicate, 01/26/2015

MarketMinder's View: Yes. It can. Neither China nor the world faces dangerous “deflationary pressure.” They face falling commodity prices. China’s producer price index (aka wholesale inflation) is falling because commodity prices are down—steel mills are paying less for iron ore, energy costs are lower, factories are paying less for raw materials. This is generally good for their bottom lines. Meanwhile, consumer prices are rising benignly, alongside fast economic and broad money supply growth.

By , Reuters, 01/26/2015

MarketMinder's View: We highly doubt Greece’s new government is going to pay that much attention to a ratings agency threatening to have an early meeting at which they might change their rating from already junk territory (B) to something slightly junkier. But we also guess this means S&P’s stated outlook for Greece’s rating (currently, “Stable”) is a misnomer. We’d suggest taking this as a friendly reminder of the typically nonsensical nature of credit ratings agency opinions.

By , Financial Times, 01/26/2015

MarketMinder's View: While this overestimates quantitative easing’s (QE) theoretical benefits, it raises some key points about the challenges of doing it in the first place. For instance: How many banks will really be willing to sell bonds with positive yields in return for central bank reserve credits carrying negative yields? As this points out, the ECB could buy bonds from mutual funds instead of banks, but then how would the newly created reserves be channeled into the banking system to spur lending? Between these issues and the fact QE weighs on Europe’s already-flat yield curves, which in turn discourage lending, we see very little likelihood that QE stimulates the eurozone. 

By , The Wall Street Journal, 01/26/2015

MarketMinder's View: Apparently the ECB is wrapping up last autumn’s stress tests by sending every bank under its purview a letter containing their very own, unique capital requirements and orders to raise more money based on whatever risks the stress tests uncovered. This isn’t terribly surprising, as the ECB long ago reserved the right to base different banks’ capital needs on qualitative factors as well as quantitative. Evidently this will happen annually, and banks don’t like it, claiming the rules are a moving target and the process isn’t transparent. That’s probably true, but the debate is also sort of moot for now. Banks probably weren’t going to lend aggressively anyway, with yield curves quite flat. It’s also sort of convenient that the ECB does all this at the same time they launch a campaign to build up bank reserves through quantitative easing (QE). We always sort of wondered if the Fed’s real goal with US QE was building bank balance sheets—seems rational to wonder the same for ECB QE, too.

By , Bloomberg, 01/26/2015

MarketMinder's View: “Kickbacks” is a harsh term to use, in our opinion, to describe the traditional broker model’s inherent conflict of interests. Now, there are, of course, conflicts in the commission-based arena. But this goes too far in presuming a fiduciary standard eliminates them. It doesn’t. All it says is your adviser must disclose conflicts (a plus) and have a reasonable basis to believe their recommendations are in your interests. You might be able to make a reasonable argument for a lot of terrible products, like variable annuities and non-traded REITs. Look, our parent company is a fee-only registered investment adviser held to the fiduciary standard, so we’re not being biased when we say the assumption the government can or should clean up the industry by changing a rule is naïve. We support free choice. Let investors decide what they value and allow competition to work its magic. Also, three factual quibbles: 1) Mutual fund “revenue sharing” probably doesn’t much influence broker recommendations per se, because it isn’t paid to the broker, but the firm. 2) Churning is already illegal—no rule change is needed to prevent that. 3) It is very odd to suggest the US government should mimic Britain’s, Belgium’s or Australia’s approach to capital markets regulation when trading costs are significantly higher in all three of those countries.

By , Bloomberg, 01/23/2015

MarketMinder's View: After news of King Abdullah’s passing, folks wondered if his successor would change tack and cut oil output to boost prices. But he said that isn’t in the cards for now, and he’s keeping the late king’s oil minister. Maybe they do change course eventually, but for now, it seems investors shouldn’t expect the king’s death to trigger a sharp rise in oil prices.

By , The Wall Street Journal, 01/23/2015

MarketMinder's View: We don’t typically highlight purely anecdotal evidence like this, and this is admittedly an extreme case, but it is a fascinating story and illustrates a few key lessons. One, margin debt is expensive, which is why we generally suggest folks avoid margin. Two, being on margin also puts you at risk of forced sales if you get a margin call, which can wipe you out in extreme cases—another reason we generally suggest folks avoid margin. Three, always stay up to speed on activity in your account and make sure you recognize it. Four, don’t count on a broker whose compensation structure incentivizes investment sales, not client service, to alert you if something in your account looks awry. Some might! But don’t think things must be hunky dory if you don’t hear a peep.

By , MarketWatch, 01/23/2015

MarketMinder's View: Agreed. Why? One: You’re paying extra for a redundant tax shell. Two: “Most annuity contracts provide some type of guarantee or an array of guarantees about the account value. These are often used as the heart of the sales pitch. All guarantees have a cost. The cost, in and of itself, isn't the problem. What is usually the problem is that in many cases, the costs cover guarantees you don't need or the costs aren't a good value. In addition, by buying an annuity, you are adding unnecessary complications. The insurance company, not you, offering the product decides what your investment options are going to be. If for any reason you want to move the money elsewhere, in many cases, you will have to contend with surrender charges. Many contracts also allow for fee increases at the discretion of the insurer up to specified limits.”

By , The Wall Street Journal, 01/23/2015

MarketMinder's View: This posits all sorts of reasons why investors should think about gold and silver—quantitative easing, currency volatility, inflation, past price movement, you get the gist. It’s all largely hogwash. Gold and silver are commodities. Not stores of value, not hedges against much of anything, not guaranteed to rise just because they’ve bounced some off a crushing bear market low.

By , CNBC, 01/23/2015

MarketMinder's View: We’re all for testing preparedness for retirement and making sure folks are adequately financially savvy for their golden years. But we took this quiz, and most of the subject matter is too far afield and the advice too misperceived to be of much practical use.

By , Bloomberg, 01/23/2015

MarketMinder's View: If America has been losing a currency war with Japan since early 2013, why is US GDP growth accelerating and leading the developed world (with growing exports) while Japan is stuck in its third recession since 2009?

By , The Guardian, 01/23/2015

MarketMinder's View: Setting aside the sociological bent, misplaced blame on banks for the financial crisis and sluggish eurozone growth and too-dour view on Europe’s economies, this has a pretty spot-on mechanical explanation of why quantitative easing (QE) doesn’t work: “It was promised that it would yield new investment. It has not. It was promised that it would ‘pump money into the economy’. It has not. It was also feared that printing money would lead to hyper-inflation. It has not, for the simple reason that no one gets to spend the money. It is a bookkeeping transaction between a central bank and a commercial bank. It means nothing as long as banks are told to build up their reserves. Money in circulation matters.”

By , Bloomberg, 01/23/2015

MarketMinder's View: Well whaddaya know: “Markit Economics said a Purchasing Managers Index for manufacturing and services advanced to 52.6 this month from 52 in December. … Services led the strengthening, with an index rising to 52.7 from 52.1, while the factory gauge slipped to 51 from 51.2.” And 50 is considered the line between contraction and growth, so goooooo Germany!

By , Financial Times, 01/23/2015

MarketMinder's View: Looks like global regulators are thinking about slapping capital requirements on banks’ sovereign debt holdings—something regulators in Europe have long hinted at, too. Some folks are already speculating about the impact, wondering whether it will raise or dent demand for riskier sovereign debt, but that all seems premature. Any capital requirements probably would create winners and losers, but there are zero concrete plans and zero details, so guessing at how banks react is moot.

By , The Telegraph, 01/23/2015

MarketMinder's View: While this is probably a bit heavy-handed in its enthusiasm over falling oil prices, the UK enjoyed some rollicking retail sales growth last quarter. Total sales volumes rose 2.3% q/q, as did sales excluding fuel. All hail the mighty UK consumer!

By , Reuters, 01/23/2015

MarketMinder's View: So a Senator is preparing a bipartisan bill to “stop currency cheats” and force “strict currency rules” into the multination Trans-Pacific Partnership trade agreement (TPP). “Currency cheats,” it seems, are nations that drive down their exchange rates to make exports cheaper and undercut the competition—something Japan is widely accused of—and it seems fair to say this push, if successful, would make TPP even less likely. That’s not a huge shock, because multinational deals like TPP always stand little chance of coming to fruition. Nor is it a negative, as world trade has grown fine without TPP—just the absence of a new positive. However, the piece aimed at punishing currency manipulators outside TPP seems a bit iffy. Currency wars, as we wrote here and here, aren’t really things, and they aren’t really bad for those who “lose” by virtue of stronger currencies. Weak currency makes exports cheaper abroad, which is nice, but it also makes imports more expensive, hurting consumers and businesses. Many exporters import parts and raw materials, so the weaker currency really isn’t a net benefit, as Japan has shown. So the need to “punish” manipulators through tariffs or trade restrictions seems odd. It could also invite protectionist blowback, which markets might not like. In our view, markets will probably be best off if gridlock kills this effort.

By , The Wall Street Journal, 01/22/2015

MarketMinder's View: As this piece highlights—and we have argued often—quantitative easing (QE) has a glorious track record of failing to meet its objectives. Its stated aim: stimulate economic growth by reducing long-term interest rates and spurring folks to borrow. Its actual impact: Flattening the yield curve and discouraging banks from lending to anyone but the safest borrowers, which, as this piece notes, “are seldom the best job creators.” Riskier borrowers, typically, tend to take more risk, which often means spend more on growthy endeavors. Eurozone QE likely flattens an already flat yield curve—not a plus for a choppy, unevenly expanding region.

By , The Telegraph, 01/22/2015

MarketMinder's View: Repeat after us: Past performance is not indicative of future returns, and the trend is not (always) your friend. The market prices in all widely known information, and the Roman calendar ranks pretty high in the “widely known” category. So why do most of these seasonal market adages have a high success rate (removing the one about gold since it is a commodity, not a stock)? Because historically, stocks rise more than they fall. Interestingly, one of the “January effect” observations acknowledges this, but then assigns causation to correlation, saying, “However, it is hard to ignore the evidence that a positive January has led to further rises more than 80pc of the time during the past 30 or so years.” If markets go up more than down, that means more months of the year—whether it’s January, June or December—will likely be up, too.       

By , The Guardian, 01/22/2015

MarketMinder's View: Here is the lesson quantitative easing (QE) taught in the US and UK and is still teaching in Japan: It doesn’t boost economic growth. Consider some numbers we’ve highlighted before. Average UK growth rate during QE: 0.2% q/q. Average after: 0.6% q/q. US weekly loan growth was at a paltry 1.8% y/y before “tapering” began in January 2014, but at year’s end, it was up to 7.7% y/y. The broadest money supply measure, M4, shrank for long stretches during both QEs. And while QE didn’t cause Japan’s third recession in five years—the country is hamstrung by its quasi-mercantilist economy—it certainly hasn’t helped boost growth (and it probably hurt by weakening the yen, making consumers’ and businesses’ lives difficult by jacking up import costs). We doubt the eurozone proves an exception to the rule.     

By , Vox, 01/22/2015

MarketMinder's View: OK party people, what time is it? It is time to put aside your partisan hats and feelings about banks for a moment and consider the possible downstream implications of this proposal. Gridlock likely prevents Congress from passing the President’s proposed 0.07% tax on all liabilities of banks with assets over $50 billion. This piece suggests the Fed could accomplish the goal through the backdoor, working with fellow regulators to ding banks identically through regulations—perhaps with a “supervisory fee” or something similar. Now, whether you believe banks should be taxed more isn’t the issue. The real problem is that it would open the door for regulators to slap pretend taxes on any or all business without going through Congress. That is a slippery slope, and stocks might not like it. Markets will probably be better off if this doesn’t happen. Even if you love this proposal, politicizing the Fed in this way is the stuff of wayward Frontier Markets nations desperately in need of reform. If you don’t agree, consider how you’d feel if the Fed head was appointed by the party you don’t favor.

By , Bloomberg, 01/22/2015

MarketMinder's View: Well actually, why those prices are falling determines if it’s a “good” or “bad” thing. The psychological deflationary phenomenon here, which implies falling prices create a vicious cycle of falling output and more deflation, is largely a myth. If it were true, we’d have had a depression during most of the 19th century’s second half, Spain wouldn’t have grown over the past year or so and we would have ample evidence of deflation preceding recession.  Falling prices are bad if they result from bad monetary policy, like sucking money out of the financial system. That isn’t happening today. Money supply has been growing globally—even in the eurozone—so global deflation isn’t really a thing. Where prices are falling, it’s largely because of plunging commodity prices. This allows consumers and businesses to put their money to work elsewhere—a fine thing.

By , CNN Money, 01/22/2015

MarketMinder's View: This is all way too much searching for meaning in bouncy times. Stocks and oil have long been prone to very high correlation over very short periods. It isn’t different this time! Longer term is where the correlation breaks down. Don’t overthink oil and stocks tracking closely the past two weeks. It’s just normal volatility, and the relationship is coincidental, not causal. None of this is a warning sign that the bull is in jeopardy.   


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Global Market Update

Market Wrap-Up, Tuesday Jan 27 2015

Below is a market summary as of market close Tuesday, 1/27/2015:

  • Global Equities: MSCI World (-0.4%)
  • US Equities: S&P 500 (-1.3%)
  • UK Equities: MSCI UK (+0.4%)
  • Best Country: Japan (+2.6%)
  • Worst Country: United States(-1.3%)
  • Best Sector: Utilities (+0.8%)
  • Worst Sector: Information Technology (-2.6%)
  • Bond Yields: 10-year US Treasury yields fell 0.02 percentage point to 1.80%.

Editors' Note: Tracking Stock and Bond Indexes

Source: Factset. Unless otherwise specified, all country returns are based on the MSCI index in US dollars for the country or region and include net dividends. Sector returns are the MSCI World constituent sectors in USD including net dividends.