Monday, May 5, 2008

Sectors and Styles Strategy Report: May 5, 2008

in this week’s report:

Model Growth Portfolio (MGP)

“The combination of the occasional pricing discrepancy between the S&P 500 and the individual economic sectors (1.15% vs. 1.41%) coupled with the strong performance by the Latin America 40 produced an overall excellent week for the MGP.

Year-to-date relative performance now sits at its highest level of the year: +172 basis points.”

Market Monitor

"The Market Monitor has been expanded to include several subsets of key regions of the global market. In developed markets, United Kingdom and Canada. In emerging markets, Malaysia, China, India (deleted “Chindia”), Russia, and Mexico. This is the first step in an overall expansion of the Market Monitor that will occur over the coming weeks.

Econ. Sectors & Industries: Energy dropped significantly, as did Steel. Tech and Telecom were the best performers.
Size & Styles: Once again, little notable performance differences vs. the S&P 500.
Global: Brazil (replacing the Latin America 40) was the big winner.
Other: Commodities joined Agriculture and Gold (second week in a row) as the big losers."

Expected Return Valuation Model

“A continuation of the same set of circumstances exists from a valuation perspective. The crux of the matter is whether lowering the risk adjustment band from the 120 – 140 basis points (which was done to reflect the increased level of risk due to the credit crisis) to the 100 – 120 range is appropriate? Lowering the range will have the effect of raising the fair value target levels….”

Moving Averages Scorecard

“Last week’s continuation of the recent equity market rally moved all segments upward with one positive shift to neutral ((Consumer Discretionary). That said, I believe there is general level of underlying weakness in the recent market rally as noted in a blog entry last Thursday and as can be seen in the following chart (see report)…”

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