Weekly Update 15-July-2016
This was a generally up week, with all asset classes rising except for the Japanese Yen, which dropped 2.9%, and the long term bonds (TLT), which fell 1.6%. Cotton, up 15.2% and palladium, up 9.0% were especially strong this week.
The strongest currencies were the Pound Sterling, which rose 4.2%, the Canadian Dollar, which gained 2.9%, and the Euro, which added 2.5%. In spite of its drop this week, the JPY remains the only government-issued currency that is up from one year ago – though by just 1.0%. Bonds were mixed, with the the short term SHY gaining 1.8% (considerably less than USD cash, which gained 2.1%) while the long term TLT fell 1.6%.
Equities were all in the black, led by the Euro STOXX, which gained 6.6%, and the Japanese Nikkei 225, which rose 6.1%. The weakest markets were gold stocks, which rose just 0.6%, and the S&P 500, which added 3.6%.
Commodities were all higher. Cotton showed the largest rise, gaining 15.2%, but the metals also performed well, with palladium up 9.0% and copper up 7.2%. Platinum was the weakest commodity, rising a respectable 3.0%.
Although not part of the weekly asset chart, interest in the UK's exit from the European Union, and what that will mean for Great Britain economically, has prompted me to start following the GBP and FTSE 100 Index, and I have added pages for these to the site for your viewing pleasure.
The Pound hit it's 25 year low of 26.3 mg in late 2011, and rallied only slightly during 2012. In 2013Q2, it began to rise strongly, and added to those gains throughout 2014 and 2015 to finish 2015 at 43.3 mg, about 65% above the 2011 low. 2016, however, has been pretty much a downhill slide, with the GBP losing 23.3% so far YTD. The recent drop due to concerns over "BREXIT" continued this trend, leaving the Pound roughly where it was back in 2012. The only other currency I follow that is in a similar position is the Canadian Dollar. Although the Euro, Swiss Franc and US Dollar are all down hard so far in 2016, they are all still well above their 2011-2012 levels; in fact they are roughly at their 2013Q2 levels.
The FTSE 100 has certainly been volatile lately, but has not been particularly hard-hit. Although down for the year to date, it is trading at about the level of 2013Q1, well above its 2011 lows.
It will be interesting to follow the British experiment with independence from the EU. It will certainly bring challenges, but it will also bring many opportunities. And the British people have historically been pretty good at recognizing and seizing on economic opportunity.