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Elkstone Private Monthly Bulletin

Elkstone Private – Monthly Update August 2018

The Market – Latest Dynamics

 

Chart Source: Bloomberg

 

One of the developments through July that has interested us most has been the extension to new highs on the US Bond-Equity ratio. One can argue as to where the trend began but our view is that Q4 2016 is the pivotal point to focus on. In other work we have drawn similarities between the chart structure now and through the bull market of the late 1990’s. The previous all-time ratio highs now look an obvious target.

 

Market Performance – EUR (€) Denominated Returns

Name Year to Date
(YTD)
Trailing 30D
(T1M)
July Return
EUR (€) EUR (€) EUR (€)
db x-trackers MSCI AC World ETF +5.49% +3.72% +2.40%
U.S. – S&P 500 +10.85% +4.93% +3.35%
Europe – Eurostoxx 600 (0.13%) +1.65% +3.07%
Gold (3.64%) (2.21%) (2.33%)
WTI Crude Oil +18.76% (5.00%) (7.49%)
Bloomberg – 6th August 2018

 

U.S. and EU Earnings Season

Q2 earnings season in US has been very good with Revenue growth +10% and Earnings +25%. The picture in Europe is also positive but more muted with Revenue +5% and Earnings +1%

US EPS chart

The US shows the very close relationship between the S&P 500 Index and Forward Earnings expectations

Chart Source: Bloomberg

 

Europe EPS chart

For Europe we see that the Stoxx 600 Index has significantly lagged the strength in Earnings

Chart Source: Bloomberg

 

Notable movers – Trailing 30 Days – EUR (€) Denominated Returns

Positive Performers
Positive Performers Trailing 30D
(T1M)
EUR (€)
Advanced Micro Devices +20.66%
Grubhub Inc. +21.06%
Illumina Inc.* +18.01%
Softbank Group (NKY) +14.57%
William Demant +13.24%
Bloomberg – 6th August 2018
Negative Performers
Negative Performers Trailing 30D
(T1M)
EUR (€)
Twitter* (28.18%)
Hanesbrands Inc (17.53%)
Husqvarna AB-B (15.24%)
Ryanair (12.84%)
Netflix (12.67%)
Bloomberg – 6th August 2018

 

Who said what?

# 1 U.S. Economy: “stronger than a garlic milkshake…and the secular bull market should continue for several years.” – Jeffrey Saut, Raymond James.

#2 Bitcoin: “Price changes in bitcoin and other cryptocurrencies are a better indicator of volatility in the market — as good as the VIX.” – Brian Stutland, Equity Armor Investments

#3 EU Jitters: “The more recent bout of political turmoil spanning across a number of member countries coupled with a clear loss of economic momentum in the region has investors questioning the sustainability of the recovery and the future of the bloc.” – Lindsey Piegza, Chief Economist Stifel Nicolaus

#4 Brexit: “The economic case for remaining a member of the EU is strong, but it will take time for it to sink in. During that time the EU needs to transform itself into an association that countries like Britain would want to join, in order to strengthen the political case.”- George Soros, Global Investor

#5 Oil Prices ahead of June OPEC meeting: “A move to put more oil on the market by Saudi Arabia and Russia would be very bearish for prices. The mere contemplation of it has hit oil prices this week.” – John Kilduff, Again Capital LLC

 

Disclaimer
This monthly marketing report should in no way be relied upon or substituted for the exercise of independent judgement. Elkstone has taken all reasonable care in the production of this material, but nothing in this note should constitute investment advice in any shape or form. Nor should it be perceived as giving accounting, tax or legal advice. This report is produced solely for educational purposes only. Individual circumstances differ, and readers should not act upon this content in any way. Readers should consult with their independent and regulated professional advisors before making any financial decisions. Prices can fall as well as rise, and may be subject to sudden and sharp moves. If you invest in the stock or other markets you may not recover the total amount originally invested. Historic performance in no way guarantees or indicates future price performance. Further risks to be aware of include currency and exchange rate fluctuations, which may also adversely impact your holdings. The educational information and opinions presented in this report were obtained or derived from sources that Elkstone deems to be reliable, but Elkstone or its related parties (employees, consultants, management, and directors) makes no representations or warranty, express or implied, as to their accuracy or completeness or correctness. Therefore Elkstone accepts no liability for loss arising from the use of the educational material contained within this newsletter.