Ss ASSET MANAGEMENT M |. t R November 1, 2017 A “Vixin g ” Puzzle JIMMY CHANG, CFA eh 5 sas Chief Investment Strategist 3 Market’s unusual lack of volatility; oes i Be fearful when others are greedy [email protected] 4“ oo. . ; 9/30/2017 10/31/2017 MTD YTD ctober has historically been a spooky month in which some of the biggest market declines took —_ sci All Country World 487 497 2.0% 17.7% place — the crash of 1929, 1987’s Black Monday, sap soo 2519 2575 2.2% 15.0% the financial crisis of 2008, etc. This October, however, = MSCIEAFE 1974 2003 1.5% 18.9% there were only treats and no tricks — the biggest one-day —_ Russell 2000° 1491 1503 0.8% 10.7% movement for the S&P 500 Index during the month wasa_ _— NASDAQ 6496 6728 3.6% 25.0% 0.81% gain, and the biggest down day had a mere 0.47% = TOPIX 1675 1766 saa 16.3% drop. That said, there was quite a bit of turbulence among = KS?! 2394 2523 5.4% 24.5% individual stocks. The Information Technology sectorhad Emerging Markets 1082 1119 3.5% 29.8% huge month, with the so-called FANG stocks (Facebook, Amazon, Netflix, Google) leading the way up, while some . 2-Year US Treasury Note 1.49% 1.60% 12 41 old economy bellwethers and the much beleaguered brick . . le 10-Year US Treasury Note 2.33% 2.38% 5 -7 and mortar retailers took a beating. The rising hope of parCap US Aag Corp Sord sor 098°. ; 08 . arCap gg Corp Spr 01% 95% - - U.S. tax reform and the continued strength of the global . . . BarCap US Corp HY Sprd 3.47% 3.38% 9 a economic expansion lifted U.S. Treasury yields as well as aap rps commodity prices from oil to copper. The U.S. reflation expectation also boosted the greenback. European australian (AUD/$) 1.28 1.31 2.3% 6.3% sovereign bond yields and the euro declined after ECB a7 Real Real/$) 416 say Sam Bee, President Draghi announced a reduction in monthly asset gyich Pound (SIGBP) _ 73 bo% 7.65% purchases starting if 2018, but promised a longer Euro ($/Euro) 148 146 4.4% 40.7% duration of QE. China completed its