The Margin

Artesys News & Insights

Weekly Commentary – 4/10/15

The MSCI ACWI IMI global investable equity index finished the week up 1.89%. The S&P 500 finished the week up 1.74%. MSCI EAFE finished up 1.56%. The Barclays US Agg Bond Index finished down 0.40% as 10-year Treasury yields rose from 1.85% to 1.96%. US Mid-Cap Growth outperformed the global equity market for the week.

 

In November, 2014, the Hong Kong and Shanghai stock exchanges created an electronic bridge called StockConnect to allow investors in China and Hong Kong to more easily buy shares on the other’s exchange. Combining these two stock exchanges creates the 3rd largest stock exchange by dollars traded, lagging only the NYSE and NASDAQ and should lead to more transparent corporate governance for Chinese public corporations.

 

Last week, we noted that the US dollar strengthened. We were referencing the DXY US dollar index. As it turns out, the euro makes up 57% of this index. The St. Louis Federal Reserve has a comparable index that they track on their website (FRED). This is a nominal trade-weighted US Dollar index comparing the dollar to a basket of 18 currencies weighted by the amount of trade they do with the US. In this basket, the euro only represents 17% of the weight. While this index also increased sharply in the first quarter, it was up 4.5%, not the 9% we listed earlier. We think this is a more representative index for the performance of the US dollar and the relative strength of the index. The index can also be calculated in real terms which adjusts the index value based on the relative CPIs of each of the country’s included in the basket. Our quarterly educational video will touch on currencies and the potential changes you should make to your portfolio based on the strengthening dollar.