Fisher Investments Editorial Staff
Media Hype/Myths

Your Annual Reminder Not to Sell in May

By, 05/03/2016
Ratings184.777778

Hello readers, it’s May, and you know what that means—pundits across the financial internets are bombarding the world with reasons they should or shouldn’t follow that tired seasonal adage, “Sell in May and Go Away.” Our take is the same as ever: Don’t do it. Seasonal tropes like Sell in May, the January Effect, the Santa Claus Rally and Financial Hurricane Season are hogwash. Their occasional hits are coincidence without causality. The turn of a calendar page is never reason to buy or sell. We’ve spilled many pixels on Sell in May over the years—see here, here, here, here, here, here and here. Here are some more pixels and pictures—pictures that show just how much investors can miss by sitting out the summer.

“Sell in May” has many iterations, but most involve selling sometime in May and returning sometime in autumn. The original saying, “Sell in May and go away, and come back at St. Leger Day,” refers to brokers’ tendency to take the summer off back in the old days, returning around the time of Britain’s St. Leger Day horse race in September. Courtesy of the Stock Trader’s Almanac, that morphed into selling on April 30 and getting back in on October 31, after Financial Hurricane Season (September and October). Regardless of the timeframe, the underlying belief is this: Stocks are a bummer in the summer, so best to just get out, go on vacation, and laugh maniacally at everyone else when markets inevitably slide. The very scant supposed evidence for this is the fact returns from April 30 – October 31, on average, trail returns from October 31 – April 30. Add in some cherry-picked years where selling in May would have worked—most recently, 2011 and 2008—and the adherents consider the case closed.

But it isn’t. For instance: Some say Sell in May worked last year, citing the correction’s May 21 start date and the S&P 500’s -9.1% decline from Memorial Day through Labor Day.[i] But that’s cherry picking dates, friends, and using the benefit of hindsight. Follow the increasingly standardized April 30 – October 31 blueprint, and you’d have missed a 0.8% S&P 500 total return. And lost out on transaction costs and potentially taxes, depending on account type.

Fisher Investments Editorial Staff
Into Perspective

Flat Past Returns Don’t Foretell Future Flatness

By, 04/29/2016
Ratings394.551282

While the recent correction seems to have subsided, many investors are weary of the market flatness that has lasted the better part of the past year, presuming recently flat returns predicts future flatness—or show the “old” bull is running out of steam. With recent volatility burned into their memories, many wonder whether they’ll be rewarded for equities’ volatility. It is true this has been an elongated period—over 300 calendar days—of basically flat returns. However, this isn’t abnormal in bull markets historically—and it doesn’t foretell weak or flat returns ahead.

The present is the ninth flat period exceeding 300 days during bull markets since 1926 and, as Exhibit 1 shows, average returns over the 12, 18 and 24 months after they ended were solidly positive. We aren’t arguing past flatness suggests big returns ahead—rather, we’re telling you there is nothing predictive about flat periods whatsoever. Allowing past market returns to cloud your outlook is a behavioral investing error—it’s why past-return drunk investors fail to see faltering fundamentals in a bubble. Fretting flatness foretells flatness is the same behavioral error, only a more pessimistic flavor.

Exhibit 1: Flat Point-to-Point Returns in Bull Markets Don’t Foretell Weakness

Fisher Investments Editorial Staff
GDP, Media Hype/Myths, Forecasting

Don’t Fret the Q1 US GDP Slowdown

By, 04/29/2016
Ratings964.166667

The US economy grew just 0.5% (SAAR) in Q1, missing expectations of 0.7% and triggering all sorts of handwringing in the financial press. Slowest pace of growth in two years! Biggest drop in business investment since the recession! Consumers still not spending their gas savings! Far be it from us to try to sugar coat any of this, as it surely wasn’t a great quarter, but it also doesn’t mean much for stocks. This entire bull market has occurred against a backdrop of below-average growth, so a sluggish quarter is just more of what stocks have enjoyed for about seven years now. Moreover, the Q1 GDP report is a flawed view of economic activity that stocks have already lived through, priced in and moved beyond. Stocks look forward, not backward, and Q1’s so-so results have no bearing on future growth.

Though growth slowed across almost all categories, many focused on the -5.9% drop in business investment—a plunge on par with the last three recessions. Considering swings in business spending tend to drive economic cycles, the jitters are understandable. But falling business investment isn’t always a harbinger of recessions. While it’s unusual for business investment to fall this much during an expansion, it isn’t unprecedented. In Q1 1987, business investment fell -9.1%, but no recession came. Sizable one-off drops also occurred in 1967, 1956, 1952 and 1951—smack in the middle of economic expansions. There is a strong reason to believe this drop should prove to be a blip, not a sign the broader economy is about to go kaput: Once again, the cratering Energy industry bears a lot of the blame. Investment in mining structures—which includes oil wells—fell -86%, the worst reading ever. That one category detracted -3.4 percentage points from business investment, making it responsible for more than half the drop.

Exhibit 1: Mining’s Drag on Business Investment

Fisher Investments Editorial Staff
Inconvenient Truths, Media Hype/Myths

The Elusive Passive Investor

By, 04/29/2016
Ratings883.903409

Over the last decade, index funds—in the form of both mutual funds and ETFs—have risen greatly in prominence in the investment world. Passive products, folks often remind us, are taking share from active products—evidence to media types and pundits that passive investing is on the rise. But, as we’ve written before, owning passive products does not make you a passive investor.Virtually all managers and individual investors who use passive products do so in an active manner, making their strategy active. There is nothing wrong with that, but it effectively renders the passive vs. active debate moot.

Passive investing means owning the broad stock market, or some mix of stocks and bonds, via index funds—and never veering from this throughout your entire investment time horizon. The idea stems from the belief markets are so efficient it’s virtually impossible to beat them.[i] Because passive investment vehicles mirror an index, they perform similarly over time, less their relatively low fees and tracking error—how much the fund deviates from the underlying index. Proponents argue this approach will generate better long-term returns than active managers that deviate further from the indexes. But in the non-theoretical world—real life—very few investors can successfully be passive and reap the long-term benefits.

The supposed evidence passive is winning out over active is the fact retail investors have largely moved away from actively managed funds and into index funds over the last decade or so. But this doesn’t mean those buying index funds are employing a passive strategy. Investors must still decide whether to invest in all stocks or a mix of stocks and bonds—their asset allocation. This is an active decision, and arguably the one that most determines whether or not you achieve your long-term financial goals. So is the next layer down, picking which funds to own. If stocks, US or global? S&P 500 or Wilshire 5000? If bonds, government or corporate? More active decisions.

Fisher Investments Editorial Staff
Personal Finance

Patience Pays

By, 04/29/2016
Ratings634.388889


Keep calm and stay invested. Photo by Paul Harizan/Getty Images.

When stocks slip on a day-to-day basis, we here at MarketMinder often repeat the following message: Short-term volatility is the price to pay for equities’ long-term gains. We realize this isn’t a revolutionary statement. Many others highlight a similar message, citing the large amount of data supporting the claim. But as persuasive as the historical evidence is, investors must deal with a deafening amount of noise screaming why they shouldn’t be in stocks—and that isn’t even accounting for humans’ natural tendency to avoid anything that immediately feels uncomfortable (e.g., a two-week market drop). That is a lot to handle! While it isn’t easy, the process is also straightforward: Successful long-term investing requires staying disciplined and minimizing easy-to-make mistakes during sentiment-driven downturns. 

The concept is simple: Long-term investors who require equity-like growth should own stocks the vast majority of the time. Why? Historically speaking, stocks have provided the best return of any similarly liquid asset class over longer time horizons. On a day-to-day, month-to-month, even year-to-year basis, stock returns can vary tremendously. Since 1926 stocks’ long-term annualized average return is 9.9%[i]—and that includes both bull and bear markets. Even if you’re skeptical about stocks, what is a better alternative? Other asset classes lag stocks over the same timeframe.[ii] US corporate bonds returned 6.1% while Treasurys provided 5.3% annualized. US muni bonds? Their annualized return was less than half of stocks’ at 4.2%.  

Fisher Investments Editorial Staff
GDP, Developed Markets

Strong Services Sustain Britain

By, 04/27/2016
Ratings264.480769

Britain grew again in Q1 2016, but you could be forgiven for thinking otherwise. The popular reaction to Wednesday’s UK GDP release fits somewhere between “meh” and “harrumph” (frowny face implied). Modest growth that sits near the top of the developed world, for many, isn’t reason enough to cheer. Because services do all the heavy lifting, while heavy industry mostly limps, most see UK growth as unbalanced and therefore unsustainable. Such was the reaction—again—to UK Q1 GDP, which grew 0.4% q/q (1.6% annualized), a tick slower than Q4 2015’s 0.6% q/q (2.4% annualized).[i] Services grew 0.6% q/q, but the other three sectors—agriculture, industry and construction—all contracted. But take heart! Nothing here should imply the UK is losing steam, or extra-vulnerable because growth relies on services. Actually, it’s the opposite. The hefty service sector helps insulate Britain from the economic impact of a global manufacturing and trade slowdown. Mass sentiment might not appreciate this, but UK stocks should.

It is generally well-known that heavy industry has struggled globally for months. JPMorgan’s Global Manufacturing Purchasing Managers’ Index (PMI) has flirted with contraction on and off since mid-2015. US Manufacturing PMI contracted from October 2015 through February 2016. Industrial production has slowed markedly in China and fallen often in the US, Europe and Japan. Trade is quite choppy, too, with several major regions struggling. As interconnected as global supply chains are, it is fairly natural that UK heavy industry would feel a pinch as well. The steel industry’s struggles—highlighted by the Redcar plant closure late last year—add another headwind and, according to earlier reports from the Office for National Statistics (ONS), bear much of the blame for weak industrial production in early 2016. Add in the oil industry’s well-known problems—mining and quarrying fell another -2.2% q/q in Q1—and heavy industry’s latest detraction from GDP is no surprise.

If the UK were a manufacturing-heavy economy, this might be enough to tip the country into recession. But it isn’t! Like all advanced economies, Britain has evolved. Services, communication and information dominate, as they do in America and much of developed Asia and Western Europe. It’s tempting to jeer this development, as heavy industry’s historical role inspires abundant affection, and it’s very sad when old mining and factory towns become shadows of their former selves, but it isn’t a net negative for Britain’s economy. For one, it’s no coincidence that life expectancies have grown leaps and bounds as the service sector has become responsible for an increasing share of jobs. Quality of life has also improved for retirees, who are far less burdened by old work-related injuries or decades of exposure to certain toxins. And service-sector jobs have enjoyed faster wage growth during the ONS industry pay dataset’s limited history. Since January 2000, service sector wages have risen 60.8%, compared to 55.6% for manufacturing.[ii]

Fisher Investments Editorial Staff
Behavioral Finance

The Maddening Mr. Market’s Favorite Trick

By, 04/22/2016
Ratings2154.190698

The Dow broke 18,000! The S&P 500 topped 2,100! Other round numbers tremble in fear, wondering if they’re next! Ok, we made up the last one, but our point remains: Folks have taken notice of stocks’ big rebound following mid-February’s lows, especially since they crashed through some “psychologically important” barriers.[i] Some wonder if it’s a sign of economic stabilization, while others suggest this is a temporary reprieve before a further fall. However, we believe stocks are doing what they typically do during bull markets: rise higher, without any predictable pattern. The market’s sharp rebound serves as a keen reminder to investors who thought the bull was stuck or tapped out—stocks can move quickly, both down and up, and staying disciplined and invested is paramount to reaping their long-term gains. 

Many have focused on what stocks have done so far this year, especially since the movement has been so dramatic: a clear example of how quickly stocks can rebound. (Exhibits 1-2)

Exhibit 1: MSCI World in 2016

Fisher Investments Editorial Staff
Media Hype/Myths, Across the Atlantic

Really, the UK Unemployment Report Wasn’t Bad

By, 04/20/2016
Ratings324.078125

Usually, a labor market report showing modest job growth and a flat unemployment rate would barely rate attention. Such data are generally a veritable snoozefest, with no forward-looking implications—despite what you will read most everywhere else, job markets follow broader economic trends at a very late lag, not the other way around. But these are not normal times. For one, pundits globally are looking for a cloud in every silver lining, eager for evidence to support their “eek the global economy is about to roll over and die” warnings. This is especially true in the UK, as politicians use every last data point to support their preconceived notions about the economic implications of “Brexit”—the scarier and more colorful, the better. And so the very benign, very boring February UK Labour Market Report attracted all sorts of attention, solely because it showed a slight increase in the number of unemployed people. Some called it a sign of creeping weakness. Others called it evidence Brexit risk is taking a toll. In our view, neither of those statements is true. Dive into the data, and there is more to cheer than jeer.

We probably wouldn’t even be writing this article if Work and Pensions Secretary Stephen Crabb hadn’t said the following in a BBC interview: “There will be companies right now today who have been looking at major investments into the UK who are hanging back and considering whether that’s the right thing to do. So of course that will have an impact. Now, I’m not saying that the increase of 21,000 in unemployment is as a direct result of that, but it’s an example of the kind of really gritty questions that those people who say Britain should leave the single market need to respond to and explain why their vision of coming out of the single market actually makes the picture better and enhances job opportunities for British workers.” That statement caused a firestorm in the Conservative Party, pitting the pro- and anti-Brexiters against each other once again. It was also widely lampooned by the press, as the data in question come from the December – February period, all but six days of which occurred before PM David Cameron scheduled the EU referendum and Brexit talk became daily front-page fodder.

But we’ll leave it to others to pillory the political cynicism on both sides of the Brexit debate. We remain neutral and will merrily concede convincing arguments on both sides. Heck, good old Mervyn King, the former BoE Chief, might have said it best Wednesday: “I think it’s very important that people should not exaggerate the impact, either of staying in or leaving. I do worry that people on both sides treating this as a public relations campaign rather than as a debate on the future of our country are inclined to exaggerate because they feel they are selling a position.” Economically, whether the UK stays or leaves will probably be a footnote in 100 years’ time.

Fisher Investments Editorial Staff
Developed Markets

More 'Broken Windows' in Japan

By, 04/19/2016
Ratings354.271429

Barely five years after the Great Tohoku Earthquake and tsunami, Earth’s tectonic plates have wreaked havoc on Japan again—this time with several strong quakes in Kyushu, centered on Kumamoto Prefecture. The first, a 6.5 temblor, hit last Thursday. A 7.3 quake hit one and a half days later, followed by a series of aftershocks. Ordinarily, the world’s reaction would center on the devastating loss of life and property—42 have perished, over 1,000 more are injured and 110,000 are displaced, at last count—much as it did following Ecuador’s 7.8 quake last weekend. Our thoughts are with those impacted by these disasters. But in Japan, many headlines almost immediately leapt to speculating about the economic impact. We saw it in 2011 and we see it again now: Many believe the quake will trigger fiscal and monetary stimulus, boosting prospects for Japanese stocks. While it’s possible Japanese stocks might get a short, sentiment-driven boost, we’d advise against trying to capitalize on it. The notion of post-disaster stimulus-fueled growth is a fallacy, and Japan’s longer-term fundamentals remain quite lackluster.

Exhibit 1 shows Japanese stocks’ relative performance since the end of 2010. After the Great Tohoku Earthquake and Fukushima Daiichi nuclear disaster, Japanese stocks plunged, trailing the MSCI World Index badly. But in early April Japan stabilized, and the country outperformed handsomely for a few months. The ride was short-lived, however, and by early October Japan was lagging the world again. A couple of sentiment-driven bumps aside, they’ve lagged, overall and on average, ever since.

Exhibit 1: Japanese Stocks’ Relative Performance

Fisher Investments Editorial Staff
Inconvenient Truths, Media Hype/Myths, Unconventional Wisdom

Living Wills Are No Way for Banks to Die

By, 04/19/2016
Ratings444.420455

No one likes planning for their demise. Not you. Not us. And not banks, if the Fed and FDIC are to be believed. Last week these regulators told five big banks to go back to the drawing board and revamp their “living wills”—plans drafted annually to serve as a “how to” manual for unwinding a big bank if they fail. In letters to these banks, regulators said their living wills failed to credibly prove they could fail in a hypothetical crisis and be unwound without touching taxpayer money. As with anything even just tangentially related to bank failure and 2008, the media is making a big deal about this, echoed by politicians. They claim these banks “are large enough that any one of them could crash the economy again if they started to fail and were not bailed out,” “If these banks don’t fix their problems over time, then regulators need to break them apart,” and "I continue to think that the largest banks in the country are too big to fail." But whatever your thoughts about big banks posing a systemic financial risk, practically speaking, living wills are powerless. They are regulators’ feckless attempt to make banks plan for an unknowable future that adds little-to-no clarity about the present.

The idea stems from 2008’s financial crisis. Many believe failing big banks—and difficulties unwinding failed banks like Lehman—caused the crisis to intensify and cascade from one bank to another. Politicians concluded Chapter 11 filing alone was insufficient, surmising a law requiring the biggest banks to plan ahead for an orderly wind down in the event they fail will help prevent or mitigate another crisis, forestalling the “need” for government bailouts. Hence the requirement for the eight biggest banks to draft “living wills.” These plans hinge on the current-day understanding of allegedly risky parts of that business. The Fed and FDIC then review and independently grade the plans for “credibility.” If either of them deem the plan credible, the bank passes. If not, they must resubmit. If they fail again, they could face higher capital requirements, stricter leverage limits or even, in extreme cases, forced divestment of certain businesses.

This year, both the Fed and FDIC gave failing grades to five banks: JPMorgan Chase, Bank of America, Wells Fargo, Bank of New York and State Street. This forced them to sufficiently rework their living wills by October 1. So what specifically was insufficient about these five banks’ resolution plans? Bloomberg’s Matt Levine summarized:

Fisher Investments Editorial Staff
Across the Atlantic

Fact-Checking the Brexit Debate

By, 04/15/2016
Ratings833.60241

Here at MarketMinder, we like facts. Facts are our friends. No matter how much you try to spin them, they remain facts, their truthfulness unspoiled. What we don’t like is when opinions, biased perspectives and speculation masquerade as facts. When contentious issues arise, folks frequently claim “the facts” support their arguments, overlooking the fact their evidence isn’t really factual. This is commonly the case for the June “Brexit” referendum, in which Brits will decide whether or not to remain in the EU. Since Prime Minister David Cameron announced the vote in February, both the Leave and Remain camps have played fast and loose with the truth. Here are several Brexit “facts” offered by both sides that we would like to add color to or outright dispel for investors. Like all political matters, we’re neutral on the actual debate, but some myth-busting should help investors assess the vote’s potential economic impact (or lack thereof).

On Trade

One of the biggest misperceptions voiced by the Remain camp is that a Brexit will torpedo UK trade. Everyone from Cameron to the IMF warns forfeiting EU membership would cost Britain free trade with other member-states as well as nations that signed free-trade agreements with the EU. Indeed, it wouldn’t be great if the UK were suddenly cut off, because even though the majority of British exports go outside the EU, the Continent still receives a significant chunk of those goods and services. UK consumers also benefit from a wealth of EU imports. However, a decision to Brexit doesn’t immediately nullify all agreements. Per Article 50 of the Lisbon Treaty, the UK will have two years to negotiate a new relationship with the EU, during which all treaties will remain in effect. During those two years, the UK can negotiate new trade agreements with the EU and its extant free-trade partners. Some in the Leave camp argue trade will be even freer outside the EU, as the UK will finally be able to negotiate its own bilateral deals. While it is true the UK would be able to negotiate bilateral deals for the first time in decades, it’s speculative to claim that spells better, or even equivalent, deals. New trade deals aren’t exactly easy to nail down. Most take far more than two years. So any potential improvements would come in the very long term.

Elisabeth Dellinger
Across the Atlantic

Brexit or No, People Are Buying UK Bonds

By, 04/15/2016
Ratings323.84375

The UK had a hugely successful 30-year bond auction this week, and ordinarily that would not be news. But people have been worried about demand for gilts, believing the high current account deficit and looming specter of “Brexit” will scare off investors and drive yields skyward, imperiling Her Majesty’s finances. Compounding matters, two big European banks resigned as primary dealers in recent months, blaming regulatory barriers. After an auction for £4 billion worth of five-year gilts just barely went off on January 20, most presumed a failed sale (when the full offering isn’t sold) was only a matter of time.

Since that auction, the current account deficit has risen to record highs, and Brexit fears have hit fever pitch. On January 20, Prime Minister David Cameron hadn’t finished renegotiating Britain’s EU membership terms with his fellow EU leaders. Since then, he has wrapped up talks and scheduled the vote (for June 23), warnings of economic doom should the UK leave have hit headlines daily, and polls have narrowed considerably. If you follow the popular narrative, this should have further eroded gilt demand.

Yet it hasn’t.

Fisher Investments Editorial Staff

About Those Dreadful Earnings Expectations

By, 04/12/2016
Ratings974.123711

Earnings season kicked off this week, and expectations are … not great. “Worst earnings season since the financial crisis” is a common theme, as pundits warn the fourth quarter of this so-called earnings recession bodes ill for stocks. Analysts have ratcheted down their forecasts even more than usual, and hopes for positive surprise are few and far between. Regardless of how Q1 earnings shape up, however, we suggest not getting caught up in the hype. Stocks look forward, not backward. Whatever drove Q1 earnings, be they dreadful or ok, has already happened. Stocks have lived through it, discounted it, and moved on. How stocks perform from here depends on what is likeliest to happen over the next 12-18 months or so, and there are good reasons to believe corporate profits will resume growing sooner rather than later.

When Q1 began, earnings expectations were ok. Consensus estimates called for S&P 500 earnings growth of 0.7% y/y, with the primary drag an expected -41.7% drop in Energy earnings.[i] All other sectors except Materials and Industrials were expected to grow. Three months later, however, any lingering optimism was gone. By March 31, analysts expected S&P 500 earnings to fall -9.4% y/y—and still be negative even if you remove Energy earnings’ projected -104% y/y decline. Financials and Materials earnings are also expected to fall double digits, and only Consumer Discretionary, Health Care and Telecom are projected to rise.

That all sounds rather dismal, and it’s natural to feel pessimistic when surrounded by such dreary forecasts. But these are just that: forecasts. Projections. Expectations. Time will tell whether they’re on target, too optimistic or too pessimistic—all three are possible. But there are a few reasons why they might be at least a shade too dour. Throughout this expansion, analysts have knocked down their estimates for a given quarter as the quarter progressed, only for results to surprise positively. Entering Q1 2015’s earnings season, analysts expected S&P 500 profits to fall -4.6% y/y. But they grew 0.9% y/y and, excluding Energy’s -56.6% y/y drop, the other nine sectors’ earnings rose 8.7% y/y. We saw similar in Q2 and Q3. Even though S&P 500 earnings fell each quarter, they beat expectations. Q2 earnings were supposed to fall -4.5% y/y—they fell just 0.7% y/y and rose 5.9% ex. Energy. Q3 earnings were also supposed to fall -4.5% y/y—they fell just -1.5% y/y and rose 5.6% ex. Energy.

Fisher Investments Editorial Staff
Reality Check, Behavioral Finance

False Fears of a False Dawn

By, 04/12/2016
Ratings1703.894118

Stocks have surged since mid-February, mostly reversing early 2016’s sharp decline. But sentiment hasn’t much improved. Many are skeptical of the rally. Some say it’s a false dawn, built on sand, and will last just long enough to fool all the suckers before stocks fall anew and hit new lows. Pundits warn nothing has fundamentally changed, and stocks are rising on short covering[i] and corporate buybacks alone. Others say Treasury yields’ failure to reverse their own early-year volatility shows “safe havens” remain in demand, another sign stocks’ good times can’t last. We’ll give them this: No one can say definitively the correction’s bottom is now in. That is only ever clear in hindsight, once stocks regain their prior high. Nor does this correction’s official end preclude another in the coming months, rare as that might be. But while volatility could always return, we think the narrative around this being a false rally is mistaken. The correction—a short, sharp, fear-driven drop—was the “fake” part. Fundamentals are positive, suggesting the bull market has further room to run regardless of any potential short-term wiggles. The skepticism about this rebound is basically the norm when corrections end. It’s a reason to be optimistic, not a reason to be fearful.

Though the rally-is-fake arguments vary, they have the same underlying premise: People believe the correction was a rational response to deteriorating fundamentals, and they worry those conditions haven’t improved. With retail fund flows still negative, earnings falling, P/E ratios high, China still China, economic data a bit mixed, oil prices still low and politics a circus, many investors have a hard time seeing anything right with the world. So if stocks are rising, of course it must be a figment of “fake” buying like buybacks and short covering, and not “real” buying, where investors bid up stocks in rational anticipation of a brighter future.

Not to be harsh, but that is the very definition of myopia. Stocks rarely move on what the financial press chatters about daily. For markets, today’s noise is just that—noise. Stocks typically look past yesterday and today and weigh what’s likeliest over the next 12-18 months or so. There are many positives for markets to weigh over that span. Forward-looking economic indicators, like The Conference Board’s Leading Economic Indexes (LEI) and the new orders components of most service and manufacturing surveys, suggest global economic growth will continue over the foreseeable future. LEIs in the US, UK and the eurozone are all in long uptrends. These regions, combined, account for about half of global output. With growing economies comes growing demand, powering profits for firms globally. For all the China fear, its economy continues growing at enviable rates, elevating more and more consumers into the middle class. China is a big end market for many Consumer, Technology and Health Care firms, and there, too, demand is surging. Other Emerging Markets also continue growing nicely—particularly those like India and South Korea, which don’t make their living exporting commodities. Deep recessions in Brazil and Russia might hog more headlines, but they are outliers. Most everywhere else, underappreciated growth is the norm and should continue.

Subscribe

Get a weekly roundup of our market insights.Sign up for the MarketMinder email newsletter. Learn more.

Recent Commentary

Fisher Investments Editorial Staff
Media Hype/Myths

Your Annual Reminder Not to Sell in May

By, 05/03/2016
Ratings184.777778

An antidote to markets’ mythological summertime blues.

read more
Fisher Investments Editorial Staff
Into Perspective

Flat Past Returns Don’t Foretell Future Flatness

By, 04/29/2016
Ratings394.551282

It is a behavioral mistake to let the last year’s market action influence your view of the future.

read more
Fisher Investments Editorial Staff
GDP

Don’t Fret the Q1 US GDP Slowdown

By, 04/29/2016
Ratings964.166667

While growth was slow in Q1, it isn’t a harbinger of worse to come.

read more
Fisher Investments Editorial Staff
Inconvenient Truths

The Elusive Passive Investor

By, 04/29/2016
Ratings883.903409

That investors are flocking to passive investment products in droves doesn’t make them passive investors.

read more
Fisher Investments Editorial Staff
Personal Finance

Patience Pays

By, 04/29/2016
Ratings634.388889

The key to long-term investing is staying invested.

read more

Global Market Update

Market Wrap-Up, Tuesday, May 3, 2016

Below is a market summary as of market close Tuesday, May 3, 2016:

  • Global Equities: MSCI World (-1.0%)
  • US Equities: S&P 500 (-0.9%)
  • UK Equities: MSCI UK (-1.8%)
  • Best Country: Australia (+0.5%)
  • Worst Country: Spain (-2.9%)
  • Best Sector: Consumer Staples (-0.3%)
  • Worst Sector: Energy (-2.4%)

Bond Yields: 10-year US Treasury yields fell 0.03 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.