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The Latest Market Commentary From Our Strategists

Daily Blog

Tuesday, March 31, 2015

Long-Run Correlation (since 1995)

The last day of the quarter started on a negative note after a huge rally yesterday. This has been the story of the quarter – U.S. large cap markets have essentially been treading water. A strong dollar, low oil, downgraded profit expectations, and the ever present speculation over the Fed’s next moves have weighed on markets, paring substantial moves forward. The S&P looks like it will post a modest gain of around 1 percent for the quarter while EAFE, Global REITs and US midcaps will be asset classes in the plus 5 percent club, generously rewarding investors who have embraced global diversification. Additionally, in the first quarter of 2015 sector performance dispersion was the widest in 3 years giving stock pickers and active management a leg up. In fact, over 50 percent of the S&P500 active managers are beating their benchmarks for the first time in years. Please review the correlations among major asset classes on page 68 of the Voya Global Perspectives™ book, noting that combining assets with low correlations offers the best diversification benefits.

Weekly Commentary & Statistics

Monday, March 30, 2015

U.S. stocks finished the week in the red, pulled down by geopolitical concerns and worries over sluggish profit earnings. Markets in Europe and Asia were mixed, with Shanghai again the leader. The yield on the widely watched ten-year U.S. Treasury started the week at 1.89%, and rose slightly to 1.96%. Oil prices posted a gain, getting a temporary lift from rising tensions in Yemen.

Monthly Commentary & Outlook

March 2015
  • February’s rally showed that the market’s most strident bears were overeager in calling the end of this nearly six-year bull run.
  • Fourth quarter earnings outpaced expectations that had been ratcheted down sharply in the face of plunging oil prices.
  • Massive exposure to large-cap equities could make for a crowded trade should investors look to flee a flagging S&P 500.
  • Signs of life in Europe and other non-U.S. markets highlight the importance of broad, global diversification.