Today's Headlines

By , The Wall Street Journal, 08/26/2016

MarketMinder's View: Another meeting, more wishy-washy commentary from the Fed. Financial pundits waited with bated breath for this week’s central banker shindig in Jackson Hole, WY, particularly hot for Fed head Janet Yellen’s speech. In it, she repeated the same message as other Fed speakers from the past several weeks in making the case for “gradually reducing accommodative policy.” Specifically, Yellen said, “In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months.” Then she went on to dial the whole thing back, basically telling the audience in highfalutin and difficult-to-unpack terms that everything she just said may be completely moot by the next time they meet. Folks, all this handwringing and excitement is unnecessary. The Fed has repeatedly demonstrated its talk doesn’t foretell its actions. What’s more, the US economy and yield curve can handle another hike.

By , RTT News, 08/26/2016

MarketMinder's View: This is actually a pretty darn positive downward revision. US Q2 GDP growth was revised down by 0.1 percentage point (1.1% vs 1.2%) for benign reasons: Imports (which subtract from GDP) were revised higher, signaling stronger domestic demand, and state and local government spending was revised lower. Non-residential fixed investment and consumer spending, meanwhile, were both higher than initial estimates. Other recent data are also positive: After-tax corporate profits rose 4.9% q/q in Q2, core consumer prices rose a moderate 1.8% y/y, and the Conference Board’s US Leading Economic Index (LEI) rose in July for the second straight month. No recession has ever begun while LEI was rising. Now, most of these numbers (GDP, profits, prices) describe the past and may be revised again in the future, and markets in the present have moved on—but they do add to an economic picture rosier than many appreciate.

By , Bloomberg, 08/26/2016

MarketMinder's View: Folks, we highlight this not to depress you on a Friday, but rather, as a prime example of inconclusive statistics making for a scary headline. Here is the argument: Higher unemployment leads to fewer auto accidents, since fewer people are commuting. Now, from a high level, perhaps you find yourself nodding along and saying, “Well, that makes sense!” However! We took a closer look at the methodology here (you can too!) and came away with more questions than answers. Like, are we to extrapolate one dataset (provided by one insurance company) from one state (Ohio) as being emblematic for the entire U-S-of-A? Look, we understand Ohio commonly gets bestowed “national barometer” status due to its swing state-status for presidential elections, but we know from experience that driving conditions in Dayton, Ohio do not match those in Los Angeles, CA or central Texas. Also, the data are self-selected (drivers who allow their driving to be monitored in exchange for a discount from the insurance company), introducing more limitations. And, finally: The time series is limited here, considering the ability to monitor driving doesn’t predate the present economic cycle. We do this data deep-dive on your behalf, dear reader, as a friendly reminder that you should always be skeptical of click-baity headlines that may play to certain biases—remember, bias blinds, a detriment in investing.       

By , CNNMoney, 08/26/2016

MarketMinder's View: French GDP was flat in Q2, a sharp slowdown from Q1’s 0.7% q/q growth. The underlying components weren’t great: Household consumption was also flat, exports and imports contracted (-0.1% and -2.0%, respectively) and business investment fell, too (-0.4%). Now, are the Euro 2016 soccer tournament, terrorism and labor strikes the primary reasons French growth came to a halt, as this piece suggests? We don’t think it’s quite that straightforward. While all three factors could have pulled forward/dampened growth, don’t lose sight of the bigger picture. France has grown in fits and starts throughout this global expansion, and flat quarters are common: five in the past three years. Despite this drag, France hasn’t knocked broader eurozone growth, as the 19-member bloc has grown for 13 straight quarters.

By , MarketWatch, 08/26/2016

MarketMinder's View: Here is an interesting read about the financial phenomenon known as “the bubble.” Bubble chatter has persisted throughout this bull market, and certainly some markets and sectors have occasionally looked frothy. However, the broader, more damaging bubbles (e.g., the 2000 Tech Bubble) develop due to investor greed, not fear. As they’re inflating, investor sentiment tends to heat up from rational optimism to white-hot, blinding euphoria that investors aim to rationalize somehow or other. (“Clicks, not profits” and “one-decision stocks” leap to mind as two historical rationalizations.) That being said, we don’t believe current bubble chatter is on target, given how dour investor sentiment currently is. And, as to London property, most economists agree rising prices are heavily influenced by tight supply. That is a rational rise, not euphoria. Euphoria would be better exemplified by fast-rising prices and abundant supply. Also, the idea you can avoid bubbles by investing in UK tracker funds is off target, too. What if the UK, a tiny slice of global markets, is the bubble itself? Diversifying globally and taking an active approach would likely work better. Overall, however, this piece provides a fine history lesson and a stark reminder that markets don’t care how smart you are—you could be as brilliant as Isaac Newton and still make poor investment decisions

By , The Street, 08/26/2016

MarketMinder's View: You need to, we need to, everybody needs to—they can be substantial, and if average health care costs continue rising, failing to plan could be even more risky. Of course, no one is an average, so take some time to consider your personal health history and what it means for your retirement. It may not be an easy discussion—in the quoted survey, most wealthy pre-retirees said they were “terrified” of potential healthcare costs, yet under half had voiced their worries to anyone or sought advice on what to do. For something this important to your own health and your financial health, though, exploring options and crafting a strategy is worth the trouble and potentially awkward conversations. 


By , MarketWatch, 08/25/2016

MarketMinder's View: This article makes a point we’ve long argued: Most people who own index funds are not actually passive investors. They are actively managing (buying, selling, making allocation decisions) a group of passive products, and there is no evidence an individual doing so will fare any better than an active manager who makes more granular decisions. As noted herein, “Thus, an investor actively working a portfolio of passive funds is not likely to do any better than the stock jockey actively running a portfolio of stocks. Moreover, the costs for running the total portfolio — for actively trading in passive funds — can be a big drag, particularly if the investor hires a money manager whose fees are charged on top of the expense ratios of the underlying funds. The all-in costs of running a portfolio (the price for advice, fund fees, the impact of transactions and more) is more important than which type of fund is used to achieve your results.”

By , Reuters, 08/25/2016

MarketMinder's View: “New orders for U.S. manufactured capital goods rose for a second straight month in July as demand for machinery and a range of other products picked up, offering a tentative sign that a business spending downturn was starting to ease. The Commerce Department said on Thursday non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 1.6 percent last month.”

By , Bloomberg View, 08/25/2016

MarketMinder's View: No? Maybe? Anyway, this is just a fun read without any real, actionable investing takeaways covering a popular research note published yesterday. Enjoy.

By , Forbes, 08/25/2016

MarketMinder's View: A spot-on take destroying the notion the US trade deficit is an economic scourge. Here is a great snippet, but we recommend reading the whole thing: “In all cases, the dollars that go abroad to purchase foreign goods and services (imports) and foreign assets (outward investment) are matched almost perfectly by dollars coming back to the United States to purchase U.S. goods and services (exports) and U.S. assets (inward investment). Any trade deficit (net outflow of dollars) is matched by an investment surplus (net inflow of dollars). That investment inflow undergirds U.S. investment, production, and job creation.”

By , The Wall Street Journal, 08/25/2016

MarketMinder's View: While this critique of Fed policy overhypes the central bank’s role in buoying stocks (and, hence, creating something that is strangely dubbed, “asset inequality”) in this bull market, the review of the extraordinary monetary policies, forward guidance and Dodd-Frank-ordained regulatory authority has very sensible aspects to it. The opening takedown of the much-discussed claim that the Fed should boost its inflation target is on target, too, though we’d add that we don’t know why these targets have credibility, given the Fed’s 2% target has most often vastly exceeded inflation in this cycle. This snippet illustrates the good and bad of this article quite well: “First, the economics guild pushed ill-considered new dogmas into the mainstream of monetary policy. The Fed’s mantra of data-dependence causes erratic policy lurches in response to noisy data. Its medium-term policy objectives are at odds with its compulsion to keep asset prices elevated. Its inflation objectives are far more precise than the residual measurement error. Its output-gap economic models are troublingly unreliable.”

By , BBC, 08/25/2016

MarketMinder's View: As ever, MarketMinder doesn't recommend individual securites, nor is this article limited to one security. This, in our view, is a matter worth watching. For a couple years, the EU has been investigating the tax practices of various multinational corporations, including several major US firms like Starbucks and Apple. Brussels suspects there were “sweetheart deals” cooked up by national governments like Ireland that reduced these multinationals’ tax bills far more than allowed by national law, and is targeting not only correction moving forward, but back taxes. The US objects to the attempt to claw back revenue and claims these changes would likely ding US corporate tax revenue going forward, and further noted in a letter sent this week that this isn’t in keeping with historical practices. The US claims that if the EU proceeds, there will be consequences. Treasury Secretary Jack Lew didn’t specify what those consequences would be, but it could be an added tax of some kind. All this remains to be seen, and there aren’t signs today that this would trigger a form of trade war, but this is worth monitoring with that in mind.

By , Bloomberg, 08/25/2016

MarketMinder's View: These are all opinions and forecasts, which share one major drawback: They lack any identifiable supporting evidence. Inflation fell month-over-month in July, the only actual post-Brexit price reading, and on a yearly basis, it's still running at historically low levels. We may see an uptick in the headline figure as falling energy prices drop out of year-over-year measures, but it's hard to see how that would risk quashing consumers. And hey, maybe the pound's post-Brexit drop does drive up prices eventually. But by how much and for how long?  

By , The Wall Street Journal, 08/25/2016

MarketMinder's View: Yep! And that, friends, is bullish. Now, this article seems stuck on the notion that economic data haven’t actually improved, which we quibble with in some cases (e.g., two straight months of rising durable goods orders and improved manufacturing data are an upward shift). But overall, this is largely correct. Expectations were ratcheted way down and haven’t rebounded, despite data that fairly consistently beat them. Stocks don’t move on fundamentals alone—it is how those data relate to expectations, and whatever level those are at, beating is bullish.

By , Financial Times, 08/24/2016

MarketMinder's View: The eurozone’s biggest economy grew 0.4% q/q in Q2, slower than Q1’s 0.7% q/q pace but consistent with the long-running trend of choppy, modest growth. The biggest contribution to growth was exports, which rose 1.2% q/q. Consumer and government spending also contributed, adding 0.2 and 0.1 percentage points to growth, respectively, while investment detracted. Growth isn’t gangbusters, but it doesn’t need to be for markets to rise. With so many still seeing the eurozone as an economic quagmire, results only need to surpass dour expectations for stocks to rally. Amid rising money supply and bank lending, growth looks set to continue.

By , Financial Advisor Magazine, 08/24/2016

MarketMinder's View: This piece marries flawed economic analysis with bad investment advice. First, consumers aren’t tapped out. Not only is one month’s retail sales data not telling, but if you omit the impact of falling gas prices, sales rose 0.2% in July. Second, basing investment decisions on a flawed interpretation of one month’s economic data is a recipe for error. Stocks are forward-looking, and no economic report is an actionable reason to buy, sell, hold or do anything with any stock, not just those listed here.

By , CNNMoney, 08/24/2016

MarketMinder's View: On the one hand, this shows how bear markets can impact investors’ psyches, driving them to sell near the bottom and miss much of the subsequent rebound. Bull markets always follow bear markets, but this is hard to believe when stocks are at their worst. On the other hand, however, it sort of falls prey to the myth that participating in a bear market early in retirement can derail your goals permanently. Not true. As long as you are patient and fully capture bull markets, riding through bear markets needn’t be devastating. Stocks’ strong long-term annualized returns include 13 bear markets since 1926. Now, while we do agree your comfort with volatility is important to consider when choosing the mix of stocks, bonds and other securities in your portfolio—if you aren’t comfy with volatility, you are less likely to stay disciplined and capture those bull markets—it shouldn’t be the sole determinant. Your long-term goals and time horizon are paramount. You can’t aim if you don’t have a target.

By , USA Today, 08/24/2016

MarketMinder's View: The five supposed market risks—a potential narrowing US presidential race, earlier-than-expected Fed rate hikes, oil possibly falling anew, earnings or economic growth disappointing and the fact September is right around the corner (the worst performing month for stocks on average)—aren’t fundamental, bull-market-ending risks. Some, like resurging electoral uncertainty, might induce volatility, but they might not. Short-term swings aren’t predictable. Presuming A causes B is a thought-process error. Regardless, these aren’t reasons to shun stocks now. Whoever becomes president, gridlock likely continues in Washington, which markets love. A Fed rate hike might rattle sentiment, but the real issue is whether it inverts the yield curve. As things stand now, it wouldn’t. As for oil prices, they have no meaningful correlation with stocks over reasonably long periods. They occasionally correlate highly for short bursts, as they did earlier this year, but there is no fundamental reason falling oil prices = falling stock prices. Plus, two years into the oil slump, stocks’ bull market charges on. Regarding earnings, it seems a stretch to say investors are “pricing in 14% profit growth” for next year when estimates are changing all the time. Markets digest all of this, including all the forecasts for growth to disappoint. And finally, September may be the worst month for US stocks, but it’s still slightly positive on average. A handful of bad years in the 1930s and 2008 bear the blame for its “worst month” status, and anyway calendars aren’t predictive.

By , The Wall Street Journal , 08/24/2016

MarketMinder's View: British government bonds have rallied sharply since the UK’s June 23 vote to exit the EU. Their plunging yields remind some of a similar move in German bunds early last year, just before those yields spiked, rattling some investors. Some presume UK gilt yields may soon meet a similar fate. We sort of wonder why it is news that bond markets are volatile. They always have been and always will be. Plus, if long-term yields rise (maybe they will, maybe not), that is good, not bad, as it means the UK yield curve steepens.

By , The Wall Street Journal, 08/24/2016

MarketMinder's View: Here are a handful of correlations that supposedly show dividends are driving stocks higher, companies are increasingly less able to pay those dividends from profits, and that stocks may fall when the dividend gravy train ends. But these correlations don’t show what this piece suggests. The correlation between stock prices and profits has fallen recently to its lowest level since the bull market began. But this just states the obvious: Stocks don’t always move one-to-one with earnings. As for the rest, none of these charts prove dividends are driving stock prices. To prove that, high-dividend stocks would need to be outperforming. These days, they aren’t—the S&P 500 and S&P 500 Dividend Aristocrats are roughly even since the correction ended on February 11. Utilities outperformed during said correction, driving that enviable year-to-date return, but they’ve lagged since.

By , The Telegraph, 08/23/2016

MarketMinder's View: This weekend, the world’s central bankers will gather deep in the Wyoming mountains (lovely this time of year!) to discuss global monetary policy. While this piece’s proposed agenda perhaps paints the world economy and banking system too darkly, it does raise important questions about the effectiveness of recent “extraordinary” policies. Quantitative easing and negative interest rates haven’t boosted growth anywhere they’ve been tried, and both flattened yield curves, hurting banks’ profits and loan growth. Looking their flaws in the face would be a step forward. We aren’t so gung-ho about the closing suggestions for a global debt write-off or perhaps a massive new wave of fiscal stimulus, though—central banks (particularly the Fed) could theoretically steepen yield curves by gradually selling long-term bonds from their sizable balance sheets. Who knows what lessons Jackson Hole attendees return to work next week with—it’s probably best not to get your hopes up for any major revelations—but the world economy and markets would likely be better off if central bankers became more introspective (depending on the resulting conclusions and actions, of course).

By , Reuters, 08/23/2016

MarketMinder's View: The Confederation of British Industry’s latest survey of UK manufacturers recorded a jump in new export orders, widely attributed to a cheaper pound, which is down 11% against the dollar since the Brexit referendum two months ago today. July’s survey registered the lowest business confidence levels since 2009, but expectations may be turning around: 19% of companies now anticipate declining output over the next three months, while 30% project the reverse. An industry group’s review of 505 firms isn’t comprehensive, and it’s just one data point—but it’s one of a few indicators suggesting UK industry isn’t cowering in Brexit’s wake.

By , RTT News, 08/23/2016

MarketMinder's View: In housing news, US home sales surged in July to a 654,000 annualized rate, 12.4% more than June’s total and 31.3% more than a year ago. In other signs of real estate market health, mortgage delinquency rates are low and falling nationwide, with the exception of just three states—Wyoming, North Dakota and West Virginia, all tied heavily to commodity prices. While residential real estate investment was only 3.4% of GDP last year, it’s still an incremental tailwind.

By , RTT News, 08/23/2016

MarketMinder's View: Results are in from August’s Flash eurozone Purchasing Managers’ Index, which measures the percentage of firms reporting growth. Once again, the number was solidly positive at 53.3, with the much larger services sector outpacing manufacturing. Interestingly, business sentiment was a drag on the final number, suggesting firms remain cautious as they anticipate fallout from Britain’s vote to leave the EU. But forward-looking new orders sped up in services and grew in manufacturing, albeit more slowly. Now, flash PMIs are preliminary—the final versions are due September 5—and as with all such surveys, they measure the scope, not magnitude of growth. That said, this is more evidence eurozone growth continues.

By , Bloomberg, 08/23/2016

MarketMinder's View: Should mutual funds’ shareholder reports go digital? The funds say yes—it saves money and paper, and folks can opt for old-fashioned pressed wood pulp if they wish. Offering the opposing view—that people should have to opt in to receive electronic documents—are a host of paper manufacturers who provide the specialized products the reports are printed on. Both sides are currently locked in an epic battle of lobbying the SEC, issuing dueling cost/benefit calculations and recruiting congressmen to their side. This fight highlights how long it can take for even the smallest regulatory changes to take effect. Though often frustrating to watch, warring vested interests are part of gridlock. While we doubt markets are waiting with bated breath to see how this one shakes out, the broader lesson is that slow-moving, hotly contested change is vastly preferable to sudden, hidden or unnoticed change.

By , The Telegraph, 08/23/2016

MarketMinder's View: Well, more precisely, tax hikes had a definite and substantial impact on UK housing, while the Brexit vote might have had a small and uncertain effect, primarily on sentiment. Tax increases on buy-to-let properties took effect in April, so sales rocketed 65% in March before plummeting 55% in April. Since then, they’ve partially recovered, with just a small drop in July. Summer is also traditionally a softer period for property sales, likely contributing to the still-subdued number. A meme around the referendum was that housing would lose big if Leave won—and perhaps lingering uncertainty is delaying some purchases—but in comparison to March – April’s wild tax-induced swing, Brexit’s impact seems negligible for now.

By , The New York Times , 08/22/2016

MarketMinder's View: We are pretty ambivalent about this piece. First, our standard political disclaimer: No political party—let alone person—is good or bad for markets. Believing stocks prefer Democrats or Republicans is a form of bias, and bias blinds in investing. Now, from a high level, this take makes a salient point: Stocks have done pretty darn well over the past seven years, and few grasp just how well. However, that has less to do with President Obama and more with how bull markets work in general. They always follow bear markets, and they run on until one of two things happen: The bull either runs out of steam as investor expectations outpace reality or a big—though little-noticed—negative wallop destroys trillions worth of global GDP and kills it. Bull markets don’t die of old age, and considering how stubbornly dour investor sentiment remains, the current bull has lurched higher amid myriad doubts. Thus, if investors remained invested, their portfolios have benefited greatly. However, we must deduct several points for the argument that the Fed and its “accommodative” interest rate policy propped up stocks since 2009. Sorry, but no: There is no set relationship between interest rates and stocks. Stocks have risen when interest rates were high; they have also fallen when rates were low. So hey, we agree that history’s “least-loved” bull market is pretty splendid, but as this article demonstrates, even optimistic takes on the news are clouded with misperceptions.

By , The Washington Post, 08/22/2016

MarketMinder's View: Follow any noun with “recession” and it sounds scary. Go ahead, try it. Restaurant recession. Earnings recession. Football recession. Sanitation service recession. See, scary! The prevalent use of the term is starting to remind us of those who add the suffix “-gate” to any scandalous activity. However, in economic parlance, a recession is a pretty specific thing. While some outfits’ definitions vary, many generally describe recession as two or more consecutive quarters of economic contraction. So, does a potential “restaurant recession” bode trouble for the economy? Not necessarily. For one, restaurant sales aren’t a leading indicator for broader consumer spending, which has been steadily rising throughout this expansion. Plus, as this piece points out, only some eateries (particularly national brands) are experiencing falling sales—it isn’t universal. More contrarian evidence: BLS data show folks are upping their grocery shopping, likely at the expense of takeout. So before fretting yet another type of recession, we suggest keeping calm and carrying on: Americans aren’t going to stop eating all of a sudden.

By , The Guardian, 08/22/2016

MarketMinder's View: While we have some quibbles with the last third of this piece, the rest is a fair look at the British economy and markets post-Brexit referendum. First, the sensible: Britain hasn’t plunged into desolation after the June 23 vote. Despite concerns and warnings that Brexit would roil businesses and consumers and send the economy into recession, recent data don’t show that. Yes, some companies cite Brexit as an impediment to business, but this isn’t the rule—others are moving forward with their plans. This isn’t terribly surprising since a vote to Leave never meant Britain would leave the EU immediately—the UK is still part of the EU and will be for the foreseeable future. The potential economic fallout is more long-term in nature, and until Britain and the EU start negotiating terms, assessing the impact is a thought exercise, not anything actionable for investors. That said, this piece reiterates a long-running, misperceived trope: the notion Brexit will inspire politicians to refocus on fiscal spending and heavy industry to drive economic growth. There is nothing wrong—or unsustainable—with the UK’s services-dominated growth model, and the economy doesn’t need any government help. The UK’s robust private sector is driving its expansion along just fine.            

By , Bloomberg, 08/22/2016

MarketMinder's View: While there is no direct market takeaway here, we found it to be an interesting discussion about everyone’s favorite econometric: GDP. On the one hand, GDP’s limitations are many. It comes with calculation quirks (e.g., imports detract, government spending adds). It is subject to constant revision. It reflects a time when heavy industry and manufacturing comprised a much larger slice of the economy. It likely understates the weighting of services- and consumption-related growth, as well as all the technological advancements people enjoy today. It ignores the obvious economic contributions of stay-at-home parents and other unpaid endeavors. And as the article notes: “In an age where $10 can buy one compact disc or a month of unlimited music streaming, it’s getting tougher to put a price on economic output.” Yet, for all those limitations, GDP is still the best we have in terms of broad gauges of growth. As one economist here succinctly noted, “GDP is easy to criticize but rather difficult to replace.” So long as investors realize GDP doesn’t tell you everything about an economy, we think it’s a fine gauge to use—at least until some smart folks develop something better.  

By , BBC, 08/22/2016

MarketMinder's View: Ladies and gentlemen, say hello to Urjit Patel, India’s next central bank governor and successor to Raghuram Rajan. Like Rajan, Patel is Western-educated, though the punditry is suggesting the Reserve Bank of India’s (RBI) new head will be more of a “classical central banker” who will focus only on monetary policy and stay out of politics. By that logic, if Rajan was preceded by his rebellious “rock star” reputation, Patel seems to be more of a backup singer? Earnest folk singer? Dylan before Newport? Sorry, analogies aren’t our thing. Anyway, unlike the punditry, we won’t start guessing how Patel will act. Investors can only evaluate central bankers once they’re actually in office and doing things. More broadly, we’d caution against overrating central bankers. They have far less influence over stock markets than people think.

By , Bloomberg, 08/22/2016

MarketMinder's View: While this perhaps ignores the last year’s worth of volatility in China’s domestic markets as a potential reason foreign and domestic investors are staying away, it is otherwise an insightful reminder about the shortcomings of China’s notoriously opaque equity markets. The primary issue comes down to credibility: “In most countries, when companies are considering an IPO, regulators require them to accurately disclose information, then let markets dictate prices. In China, the reverse holds true: Regulators assess a company’s balance sheet and history, mandate an offering price, and then let the market figure out who might be lying or hiding things.” Moreover, regulators have a tendency to meddle and interfere in the name of financial stability. While that preserves certain companies and shareholders in the short term, it also wrecks investor confidence and discourages accountability—if businesses assume they’ll be saved, they have no incentive to avoid reckless behavior. Though China has paid lip service to allowing “market forces” more influence—part of the country’s long-term financial liberalization plan—it will likely be a process that moves in fits and starts.


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Global Market Update

Market Wrap-Up, Thursday, August 25, 2016

Below is a market summary as of market close Thursday, August 25, 2016:

  • Global Equities: MSCI World (-0.2%)
  • US Equities: S&P 500 (-0.1%)
  • UK Equities: MSCI UK (-0.8%)
  • Best Country: Ireland (+0.7%)
  • Worst Country: UK (-0.8%)
  • Best Sector: Utilities (+0.1%)
  • Worst Sector: Health Care (-0.9%)

Bond Yields: 10-year US Treasury yields rose 0.02 percentage point to 1.58%.


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.