International Stocks, Gold, the Dollar, and Bonds

International Stocks, Gold, the Dollar, and Bonds

Posted on June 08, 2021
As has been consistent for most of 2021, Value stocks continue to lead growth stocks on a relative basis.  In fact, of the six style indexes (large caps, mid caps, small caps—both growth and value), large cap value has been the strongest risk adjusted performer, and large cap growth is the weakest.

The strength of value stocks is also reflected the current rankings for US sectors.  Financials have held the top spot in our rankings for most of 2021.  Currently, real estate sits as the number 2 sector, and Energy and Basic Materials follow.  Growth heavy sectors like Technology and Consumer Discretionary (which contains Amazon and Tesla), are in the bottom 3 of the sector ranks.  That being said, the markets remain in a low volatility (low risk), bullish Market State.  While technology-related stocks have lagged other segments of the markets, we are still seeing a rising tide lifting all ships.

International Stocks
One area of the markets to keep an eye on is international equities.  We have seen a weak US dollar this year, which benefits international stocks.  The EAFE index (Europe, Asia, Far East), has seen a steady rise on low volatility.  Emerging markets is an area to keep an eye on.  From a technical perspective, the Emerging market index has been fluctuating in a trading range over the last few months.  Last week, the index broke above its upper resistance.  We will continue to keep a close eye on Emerging Markets to see if it can hold that resistance line and gain momentum in relative strength.


Source: AIQ Technical Systems

Gold, the Dollar, and Bonds
We just mentioned that the US Dollar has been extraordinarily weak this year.  In fact, its value topped out in March of 2020 and has been on the decline ever since.  Bonds have shown a similar story.  Interest rates have been falling for quite some time, and as a result, treasury bonds have declined in value.  Gold, on the other hand, had been struggling since peaking in August of last year.  Recently, however, Gold has seen a surge in strength, breaking above many of its moving averages. While the dollar and bonds remain weak, Gold has some positive characteristics.


Source: AIQ Technical Systems

Bottom Line
Value continues to outperform growth on a relative basis, and the equity markets remain in a low volatility state for now.  International equities may be preparing to pick up some steam in relative strength following a potential breakout of resistance in Emerging markets.  Treasury Bonds and the US dollar continue to show weakness, while Gold is showing some positive signs of potential strength.

Canterbury Investment Management: Tom Hardin

More About Tom Hardin

As Chief Investment Officer, Tom has more than 30 years of experience in the investment management industry and has a broad breadth of knowledge. He is known as an innovator, educator and has been revolutionary in the advancements of portfolio and risk management.

 
Canterbury Investment Management: Tom Hardin

More About Brandon Bischof

Brandon is directly responsible for managing the Canterbury Analytics Group (CAG). To date, Canterbury Analytics Group has played an important role in advancing portfolio management from a loose art form based on subjectivity and obsolete assumptions to an adaptive process with scientific rules and methods capable of providing evidence based results and statistically relevant value add results.


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