A Tale of Two Risk Stories: Small/Micro Cap and Emerging Markets

excerpts from this week's report:

"With the liquidity game back on, the return of the risk trade has also made its re-entrance – with a vengeance. Last week’s power move to the upside led by the higher risk segments of global equity markets has driven certain indices to new all-time highs. Bye, bye fear, hello risk.

The chart on the next page (see report) shows the inverse relationship between the VIX and the high volatility segments of the US and global markets – Small and Micro cap, Emerging Markets and Latin America 40. Here one can see the most pronounced effects of the return of the liquidity game (and the establishment of the Bernanke put). Clearly liquidity has a very stimulating effect on the higher tier of the risk spectrum with the concurrent decline in fear in the form of a lower VIX. There are, however, reasons to be less than completely sanguine re both groupings as they each have risk factors that should give a prudent investor pause.

The chinks in the bullish armor for the Small and Micro cap styles center on two..."

"In regards to the Emerging Markets and Latin America 40 grouping, the risks are primarily..."

also in this week's report:

* Valuation Model
* Model Growth Portfolio
* Investor Sentiment Data
* Chart Focus:The US Consumer
* Sectors and Styles Market Monitor
* Key Economic Indicators

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