Versus Capital is a partner that we utilize for private real estate and real asset investing on behalf of clients.
Versus Capital Update
Leave the Past Behind
Stocks put in a bottom on Christmas Eve of 2018 and have since rallied close to 10 percent. While December of last year was the worst since 1931, we believe that the worst is behind us.
Growing But Slowing
2019 is off to a turbulent start. The first couple trading days of the year were the worst in 18 years, only to be eclipsed by a huge rally today that left equity investors a bit richer for the week, albeit whipsawed in the process.
Turning the Page
As we look back on 2018, we can summarize the year as one where volatility emerged at the same time equity markets and the economy diverged enormously. In fact, 2018 is estimated to produce the strongest economic growth since the Global Financial Crisis at 3.0 percent.
The Present We Didn’t Ask For
While expectations were for the Fed to raise the federal funds rate by 0.25 percent, there was a small glimmer of hope that they may hold pat.
Walking Slowly in a Dark Room
When the Federal Reserve meets next week, everyone will be waiting to hear what they have to say about future interest rate hikes.
Market Seesaw
With a week subdued by a day of mourning, traders hoped market volatility would follow suit: it did not. In less than three trading sessions the S&P 500 traded down five percent, the Dow Jones Industrial Average lost more than 1,400 points and small cap stocks lost 6 percent.
Trade Policy Tango
This weekend, many world leaders will travel to Buenos Aires, Argentina, for a meeting of the Group of Twenty, also known as, “G20.” Although the G20 does not have the power to enforce policies, the outcomes of G20 summits have been highly influential to global policy.
A Time for Thanksgiving
Slowing, Not Shrinking
As the U.S. expansion draws closer to becoming the longest on record, a number of economic and political risks have emerged or intensified in recent months, leading to global equity market weakness.
The Way It Is
It was a busy week in Washington with a highly anticipated midterm election followed by the Federal Reserve meeting. The results of both came in as expected although it seems the markets were not synced to that result.
More Attractive Valuations
As we expected at the beginning of the year, S&P 500 valuations have contracted year-to-date. Typically during an economic expansion, we see stocks move higher with earnings. Investors are willing to pay more for those earnings with the assumption that growth will continue.
Glass-Half-Empty Earnings Season
On Wednesday this week the S&P 500 plunged by 3 percent on cumulative fears of slowing economic and earnings growth as well as concerns of a slowdown in China and the Federal Reserve being too aggressive in increasing short-term interest rates.
Short Pullback in a Long Bull Market
In recent weeks, the 10-year U.S. Treasury rose to three-and-a-quarter percent—a level not seen since 2011. In addition, the stock market sold off five percent from all-time highs, volatility has risen and the Chinese and European markets dipped. All this amid a backdrop of good corporate earnings and moderate-to-good economic news.
Growth Gain, Stock Pain
Global markets sold off sharply on Wednesday and Thursday as investors continued to wrestle with a diverse set of risks.
Sprint to the Finish
U.S. investors who enjoyed strong fourth quarter equity returns were dealt a change in market landscape this week. While history has demonstrated a low correlation between equities and U.S. government bonds – exactly the reason why Treasuries are such an important diversifier of equity risk -- this week proved to be an exception. Stock and bond prices both fell following news that the U.S. and Canada had reached agreement about modifying trade terms in North America.
Not So Fast, My Friend
It had been four years since ESPN College GameDay had been to Eugene. While the game last week between University of Oregon and Stanford was entertaining, Lee Corso’s pick of Ducks proved to be on the wrong side. In the spirit of the former coach and broadcaster, we use his infamous line, “Not so fast my friend,” when describing third quarter returns.
Reshuffling the Deck
On Monday, the most widely followed U.S. equity index, the S&P 500, will re-arrange its sector classification system.
Inflation is in the Eye of the Beholder
This week, the U.S. Bureau of Labor and Statistics (BLS) released their monthly measurement of inflation: Consumer Price Index (CPI), annualized 2.7 percent, was down 0.2 percent from the month prior.
