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Thursday, December 17, 2015

Year End 2015

Goodbye to twenty fifteen, hello to fifteen plus one,
I hope your year’s been good, as it’s all but said and done.
Some ups and downs we’ve had, we’ve taken a bruise and bump,
We’ve heard some stupid stuff, almost all of it from Trump.
How will this year be written? When historians look back,
It will likely be remembered, as the year of the terror attack.
Another likely legacy, when scholars about the year will ask,
Is that even the liberals conceded, that Obama wasn’t up to the task.

There was much bad news this year, and more than just one crisis,
Many of them caused, by the lunatics called ISIS.
Our hearts go out to all, our friends in Paris, France,
Attacked twice in the past year, by crazies in a suicide trance.
Plane crashes too we saw, over the Sinai a Russian jet,
A deranged pilot over the French Alps, stranger than that it doesn't get.
Mass shootings almost every week, on this side of the Atlantic,
Jihad in San Bernardino, it leaves you feeling frantic.

Goodbye to Yogi Berra, so much we learned from thee,
As we look out towards the future, it sure ain’t what it used to be.
We’ll miss you Leonard Nimoy, you went where no man went before,
May we all live long and prosper, as we continue to explore.
Your voices will live on, Ben E. and BB King,
You sure could play the R&B, and boy could you guys sing.
Omar Sharif and Kirk Kerkorian, John Nash and Lee Kuan Yew,
You left your mark on this world, as very few can do.

The markets all were tough, making everyone feel pissy,
It started right in January, with the revaluation of the Swissie.
By springtime we had thawed, though commodities kept sneezing,
The risk appetite was whetted, with Draghi’s quantitative easing.
Though early summer felt nice, by August we were back on our knees,
As we saw crude oil break forty, and a devaluation from the Chinese.
All the while the Fed kept threatening, to give the rates a raise,
We’ll see if their recent boost, will bring an end to this malaise.

Growth destroyed the value, as the FANGs all did rerate,
Labor force participation and Brady’s footballs, sadly did deflate.
Junk amongst your junk bonds?  It’s enough to cause a panic,
E.coli in your burrito? It’s not even safe to eat organic.
A nukes deal with Iran, with Cuba diplomatic relations,
Some places to consider, for your next spring break vacations. 
Josh Duggar and Bill Cosby, two sickos down in flames,
Brian Williams and his stories, all based on bogus claims.

Prepare yourself for next year, it’s really not far in the future,
If your portfolio is bleeding, raising cash could be a suture.
You can blame any losses on the Fed, or blame it on bad karma,
You can blame it on dispersion, or just blame Valeant Pharma.
Making choices can be tough, with spouses and with money,
It’s all about the tradeoffs, like choosing sad or funny.
You can’t always win in life, whether it’s investing or badminton,
Choices can be no win situations, as in choosing Trump or Clinton.

Tuesday, December 1, 2015

November 2015 - Monthly Market Commentary

November was a mixed month for global risk assets.  Developed market equities were mostly higher, while emerging market equities were mostly lower, the US Dollar strengthened, commodities weakened, credit spreads widened, and US interest rates increased.  Concerns over global economic weakness faded as the terrorist attacks in Paris and ensuing reaction dominated news headlines.  The Federal Reserve FOMC did not meet in November, though Chairwoman Yellen indicated in Congressional testimony that a December rate hike was “a live possibility” given that the US economy was “pretty strong and growing at a solid pace”.  The US job report showed 271,000 jobs were added in October, while the unemployment rate fell to 5.0% and the labor force participation rate remained at 62.4%, a four decade low. 
Notable corporate transactions announced in November included the $23.4 billion acquisition of Visa Europe by Visa, Shire’s $5.9 billion purchase of Dyax, Activision Blizzard’s $5.9 billion acquisition of King Digital Entertainment, Expedia’s $3.9 billion purchase of HomeAway., Alibaba’s $4.2 billion acquisition of Youku Tudou, Plum Creek Timber’s $20 billion merger with Weyerhauser, Molson Coors’ $10 billion purchase of the remaining stake in the MillerCoors joint venture, Marriot’s $12.2 billion acquisition of Starwood Hotels, Liberty Global’s $5.3 billion acquisition of Cable & Wireless Communications, Urban Outfitters’ purchase of Pizzeria Vetri, Air Liquide’s $10.3 billion acquisition of Airgas, and Pfizer’s $155 billion merger with Allergan.
Developed market equity markets were mixed in November (see page 8) as Germany (+4.6%), France (+1.5%), and Japan (+1.1%) saw the biggest gains, while Hong Kong (-3.1%), Australia (-0.7%), and Canada (-0.3%) saw the biggest losses.  US small caps outperformed, with the Russell 2000 up 3.3% and the S&P500 up 0.3% (see page 2).  Financials (+1.9%), Industrials (+0.9%), and IT (+0.9%) were the best performing sectors in November, while Utilities (-2.1%), Telecom (-1.3%), and Consumer Staples (-1.1%) were the worst performing (see page 2).  Large cap growth (+0.3%) slightly underperformed large cap value (+0.4%) in November (see page 3).  Emerging Market equities were mixed in November (see page 9), with the biggest gains in Russia (+3.4%), Malaysia (+0.6%), and Indonesia (+0.3%); Argentina (-9.9%), China (-3.4%), and the Philippines (-2.9%) were the worst performing. 
In currencies, the USD Index strengthened 3.3% in November (see page 10).  The weakest developed market currencies against the USD were the Euro (-4%), Swiss Franc (-4%), and New Zealand Dollar (-2.9%), while the Australian Dollar (+1.2%) strengthened against the USD.  The USD was stronger against most emerging market currencies with the biggest gains seen against the South African Rand (-4.3%), Russian Ruble (-3.5%), and Indian Rupee (-1.6%); the Malaysian Ringgit (+1%) and Turkish Lira (+0.1%) strengthened against the USD (see page 10).
US Treasury yields rose in November (see page 12) across the curve.  10 year rates closed the month at 2.21%, up from 2.14% at October month end.  Investment grade and high yield credit spreads widened in November (see page 13).
In commodities, the GSCI index was down 9% in November (see page 11), with losses in Energy (-11.1%), Livestock (-8.4%), Precious Metals (-7.1%), Industrial Metals (-6.9%), and Agriculture (-3.9%).  Within individual commodities, Sugar (+2.8%) and Cocoa (+2.1%) moved higher, while Palladium (-19.9%), Platinum (-15.8%), and Crude Oil (-13.1%) saw the biggest losses; Gold was down 6.7%.

Contact CurAlea Associates for a Daily Market Review.

Monday, November 2, 2015

October 2015 - Monthly Market Commentary

October was a strong month of recovery for global risk assets.  Global equities rallied sharply, credit spreads tightened, emerging market currencies strengthened versus the US Dollar, and volatility fell sharply across asset classes.  Investors regained confidence in the global economic outlook as China’s central bank lowered benchmark interest rates and reduced bank reserve requirement ratios, and the ECB indicated that it could take additional steps before year end to bolster growth.  The Federal Reserve surprised markets by stating that it may raise interest rates at their December meeting.  Earlier in the month, the US job report showed 142,000 jobs were added in September, while the unemployment rate held steady at 5.1% and the labor force participation rate declined to 62.4%, a four decade low. 
Notable corporate transactions announced in October included the $15 billion merger of China’s Meituan and Dianping, Blackstone’s $4.9 billion purchase of BioMed Realty Trust, Dell’s $67 billion acquisition of EMC, AB InBev’s $106 billion purchase of SABMiller., Wells Fargo’s acquisition of GE Capital’s Commercial Distribution Finance and Vendor Finance businesses with assets of $32 billion, AmSurg’s $5 billion purchase of Team Health Holdings, Western Digital’s $19 billion purchase of SanDisk, Starwood Capital’s $5.4 billion acquisition of 23,000 apartments from Equity Residential, Bridgestone’s $835 million acquisition of Pep Boys, Duke Energy’s $4.9 billion purchase of Piedmont Natural Gas, ICE’s $5.2 billion acquisition of IDC from Silver Lake & Warburg Pincus, Walgreens’ acquisition of Rite Aid for $9.4 billion, Snyder’s-Lance $1.27 billion purchase of Diamond Foods, IBM’s acquisition of The Weather Company, and KeyCorp’s purchase of First Niagara Financial for $4.1 billion.
Developed market equity markets were higher in October (see page 8) as Germany (+11.8%), Japan (+10.9%), and France (+9.5%) saw the biggest gains.  US small caps underperformed, with the Russell 2000 up 5.6% and the S&P500 up 8.4% (see page 2).  Materials (+13.5%), Energy (+11.4%), and IT (+10.8%) were the best performing sectors in October, while Utilities (+1.1%), Consumer Staples (+5.8%), and Financials (+6.2%) were the worst performing (see page 2).  Large cap growth (+8.6%) outperformed large cap value (+7.5%) in October (see page 3).  Emerging Market equities were higher in October (see page 9), with the biggest gains in Argentina (+44.9%), China (+9.1%), and Indonesia (+8.2%); India (+1.1%), Brazil (+1.5%), and the Philippines (+2.7%) were the worst performing. 
In currencies, the USD Index strengthened 0.6% in October (see page 10).  The weakest developed market currencies against the USD were the Swedish Krona (-2%), Euro (-1.5%), and Swiss Franc (-1.5%), while the New Zealand Dollar (+5.9%), British Pound (+2%), and Canadian Dollar (+1.8%) strengthened against the USD.  The USD was weaker against most emerging market currencies with the biggest gains seen in the Indonesian Rupiah (+6.7%), Korean Won (+3.9%), and Turkish Lira (+3.8%) (see page 10).
US Treasury yields rose in October (see page 12) across the curve.  10 year rates closed the month at 2.14%, up from 2.06% at September month end.  Investment grade and high yield credit spreads tightened in October (see page 13).
In commodities, the GSCI index was up 0.2% in October (see page 11), with losses in Industrial Metals (-2.8%), and Energy (-0.3%) and gains in Agriculture (+1.5%), Precious Metals (+2.9%), and Livestock (+3%).  Within individual commodities, Sugar (+12.7%), Feeder Cattle (+9.3%), and Platinum (+8.8%) led gains, while Natural Gas (-15.3%), Lean Hogs (-11.3%), and Aluminum (-7%) moved lower; Gold was up 2.4%.

Contact CurAlea Associates for a Daily Market Review.

Thursday, October 1, 2015

September 2015 - Monthly Market Commentary

September was another difficult month for global risk assets.  Global equities continued to sell off, the US Dollar strengthened versus most developed and emerging market currencies, credit spreads widened, and crude oil resumed its decline.  Risk appetite remained weak in September as investors continued to fret about weakness in the Chinese economy; policy makers seemed to share this concern as Fed Chairwoman highlighted in the news conference following the Fed’s decision to keep interest rates unchanged at their September meeting.  Earlier in the month, the US job report showed 173,000 jobs were added in August, while the unemployment rate dropped to 5.1% and the labor force participation rate remained at 62.6%, a 38 year low. 
Notable corporate transactions announced in September included Blackberry’s $425 million purchase of Good Technology, Emera’s $6.5 billion acquisition of Teco Energy, Tesco’s sale of its South Korean operations to MBK Partners for $6.1 billion, Media General’s $2.4 billion purchase of Meredith Corp., Blackstone’s $4 billion purchase of Strategic Hotels, Altice’s $17.7 billion purchase of Cablevision, Dialog Semiconductor’s $4.6 billion acquisition of Atmel, BBA Aviation’s $2 billion purchase of Landmark Aviation from the Carlyle Group, Alcoa‘s decision to split into two publicly traded companies, Energy Transfer Equity’ $37.7 billion acquisition of the Williams Companies, IBM’s acquisition of Meteorix, and Japan Tobacco’s purchase of the overseas rights of Reynold American’s Natural American Spirit brand.
Developed market equity markets were lower in September (see page 8) as Spain (-7.6%), Japan (-6.8%), and Germany (-6.2%) saw the biggest losses.  US small caps underperformed, with the Russell 2000 down 4.9% and the S&P500 down 2.5% (see page 2).  Materials (-7.4%), Energy (-6.7%), and Healthcare (-5.7%) were the worst performing sectors in September, while Utilities (+2.9%), Consumer Staples (+0.5%), and Consumer Discretionary (-0.6%) were the best performing (see page 2).  Large cap growth (-2.5%) outperformed large cap value (-3%) in September (see page 3).  Emerging Market equities were mostly lower in September (see page 9), with the biggest losses in Argentina (-17.4%), Indonesia (-9.4%), and Russia (-5.6%); Korea (+2%), Malaysia (+1.3%), and India (-0.8%) were the best performing. 
In currencies, the USD Index strengthened 0.5% in September (see page 10).  The weakest developed market currencies against the USD were the Norwegian Krone (-2.8%), British Pound (-1.4%), and Australian Dollar (-1.3%), while the Swedish Krona (+1.2%), Japanese Yen (+1.1%), and New Zealand Dollar (+0.9%) strengthened against the USD.  The USD was stronger against most emerging market currencies with the biggest losses seen in the Brazilian Real (-8.3%), Malaysian Ringgit (-4.8%), and the South African Rand (-4.2%) (see page 10); the Indian Rupee (+1.3%) and Chinese Yuan (+0.3%) strengthened versus the USD.
US Treasury yields moved lower in September across the curve (see page 12).  10 year rates closed the month at 2.06%, down from 2.21% at August month end.  Investment grade and high yield credit spreads widened sharply in September (see page 13).
In commodities, the GSCI index was down -6.3% in September (see page 11), with losses in Energy (-10%), Livestock (-6.3%), Precious Metals (-1.4%), and Industrial Metals (-1.4%) and gains in Agriculture (+3.1%).  Within individual commodities, Brent Crude (-12.3%), Feeder Cattle (-11.7%), and Heating Oil (-10.7%) led losses, while Sugar (+11.5%), Palladium (+8.1%), and Lean Hogs (+5.8%) moved higher; Gold was down -1.5%.
Contact CurAlea Associates for a Daily Market Review.

Tuesday, September 1, 2015

August 2015 - Monthly Market Commentary

August was a difficult month for global risk assets.  Global equities sold off sharply, the US Dollar strengthened versus emerging market and commodity currencies, but weakened versus the Euro and Yen, and credit spreads widened.  The big macro headline for the month was China’s devaluation of the Yuan on August 11, sparking a risk off mentality across all asset classes for the rest of the month, and removing the Greek financial crisis from the front page.  A few days earlier, the US job report showed 215,000 jobs were added in July, while the unemployment rate and labor force participation rate both held steady at 5.3% and 62.6%, respectively.  Late in the month, US 2nd quarter GDP growth was revised higher to a seasonally adjusted annual rate of 3.7%, from the initial estimate of 2.3%.  All eyes are now on the Federal Reserve’s September policy meeting, where the central bank will have to balance a steadily improving US job market with low inflation and the recent turmoil and heightened volatility in global asset markets. 
Notable corporate transactions announced in August included Exor’s $6.9 billion purchase of PartnerRe, Banco Bradesco’s $5.2 billion acquisition of HSBC’s Brazil business, IBM’s $1 billion purchase of Merge, Qualcomm’s $47 million purchase of Ikanos, Silver Lake’s $1 billion investment in Motorola Solutions, Berkshire Hathaway’s $37.2 billion acquisition of Precision Castparts, Carlyle’s $8 billion purchase of Symantec’s Veritas unit, BB&T’s $1.8 billion acquisition of National Penn Bancshares, Capital One’s $9 billion acquisition of GE’s healthcare financial services operations, QVC’s $2.4 billion purchase of Zulily, Brookfield’s $6.5 billion acquisition of Asciano, Valeant’s $1 billion purchase of Sprout Pharmaceuticals, Southern Companies’ $8 billion acquisition of AGL Resources, and Schlumberger’s $12.7 billion purchase of Cameron International.
Developed market equity markets were lower in August (see page 8) as Hong Kong (-12.9%), Germany (-8.8%) and Spain (-8.5%) saw the biggest losses.  US small caps underperformed slightly, with the Russell 2000 down 6.3% and the S&P500 down 6% (see page 2).  Telecom (-3.4%), Utilities (-3.4%), and Energy (-4.2%) were the best performing sectors in August, while Health Care (-7.9%), Financials (-6.8%), and Consumer Discretionary (-6.4%) were the worst performing (see page 2).  Large cap growth (-6.1%) performed roughly in line with large cap value (-6%) in August (see page 3).  Emerging Market equities were mostly lower in August (see page 9), with the biggest losses in China (-11.7%), Brazil (-8.4%), and Malaysia (-6.9%); Russia (+1.2%), Argentina (-1.3%), and Mexico (-2.1%) were the best performing. 
In currencies, the USD Index weakened 1.6% in August (see page 10).  The weakest developed market currencies against the USD were the New Zealand Dollar (-3.8%), Australian Dollar (-2.7%), and British Pound (-1.8%), while the Japanese Yen (+2.2%), Euro (+2.1%), and Swedish Krona (+1.8%) strengthened against the USD.  The USD was stronger against emerging market currencies with the biggest losses seen in the Malaysian Ringgit (-8.5%), Brazilian Real (-5.5%), and the Turkish Lira (-4.9%) (see page 10).
US Treasury yields moved slightly higher in August (see page 12).  10 year rates closed the month at 2.21%, up from 2.18% at July month end.  Investment grade and high yield credit spreads widened in August (see page 13).
In commodities, the GSCI index was up 0.3% in August (see page 11), with losses in Agriculture (-3.5%), Industrial Metals (-1.9%), and Livestock (-0.1%) and gains in Energy (+1.6%) and Precious Metals (+2.9%).  Within individual commodities, Soybeans (-5.6%), Gasoline (-4.9%), and Sugar (-4%) led losses, while Lean Hogs (+6.8%), Heating Oil (+6.4%), and Gold (+3.4%) moved higher.
Contact CurAlea Associates for a Daily Market Review.

Tuesday, August 4, 2015

July 2015 - Monthly Market Commentary

July was a difficult month for global risk assets.  Developed market equities outperformed emerging market equities, large caps outperformed small caps, the US Dollar strengthened, commodities were sharply lower, and the US interest rate curve flattened.  The US job report showed 223,000 jobs were added in June, bringing the unemployment rate to 5.3%, the lowest since April 2008, though the labor force participation rate fell to 62.6%, the lowest since 1977.  At the Federal Reserve’s July policy meeting, the central bank left its benchmark interest rate unchanged at zero, but signaled that it remains on track to raise interest rates before year end; with three remaining policy meetings in 2015, pundits are busy speculating about which meeting might bring the first rate hike.  Second quarter annualized GDP growth was 2.3%, while first quarter growth was revised higher to 0.6% (from a 0.2% contraction); the revision brought growth estimates for the first half of the year to 1.5%.  Additional historical revisions reduced annualized GDP growth estimates from 2012-2014 to 2%, 0.3% lower than previous estimates.
Notable corporate transactions announced in July included a $28.3 billion purchase of Chubb by ACE, Aetna’s $37 billion acquisition of Humana, PayPal’s $890 million purchase of Xoom, Procter & Gamble’s $12.5 billion sale of its beauty business to Coty, MPLX’s $21 billion purchase of MarkWest Energy, Celgene’s $7.2 billion acquisition of Receptos, Lockheed’s $9 billion purchase of Sikorsky from United Technologies, SunEdison’s $2.2 billion acquisition of Vivint Solar, St Jude Medical’s $3.4 billion purchase of Thoratec, Pearson’s $1.3 billion sale of the Financial Times to Nikkei, Anthem’s $48 billion acquisition of Cigna, Teva’s $40.5 billion purchase of Allergan’s generics business, Solvay’s $5.5 billion acquisition of Cytec Industries, and UPS’ $1.8 billion purchase of Coyote Logistics.
Developed market equity markets were mostly higher in July (see page 8) as France (+5%), Italy (+4.1%) and Spain (+3.7%) saw the biggest gains and Canada (-3.7%), Hong Kong (-1.7%), and Australia (-0.2%) saw the biggest losses.  US small caps underperformed, with the Russell 2000 down 1.2% and the S&P500 up 2.1% (see page 2).  Utilities (+6.1%), Consumer Staples (+5.5%), and Consumer Discretionary (+4.8%) were the best performing sector in July, while Energy (-7.7%) and Materials (-5%) were the worst performing (see page 2).  Large cap growth (+3.4%) outperformed large cap value (+0.4%) in July (see page 3).  Emerging Market equities were mostly lower in July (see page 9), with the biggest losses in China (-10.8%), Argentina (-10.1%), and Taiwan (-5.1%); India (+2.5%), Russia (+1.5%), and Malaysia (+1%) were the best performing. 
In currencies, the USD Index strengthened 1.9% in July (see page 10).  The weakest developed market currencies against the USD were the Australian Dollar (-5.2%), Canadian Dollar (-4.5%), and Norwegian Krone (-3.9%).  The USD was also stronger against emerging market currencies with the biggest losses seen in the Russian Ruble (-10.3%), Brazilian Real (-9.3%), and the Korean Won (-4%) (see page 10).
The US Treasury yield curve flattened in July (see page 12).  10 year rates closed the month at 2.18%, down from 2.35% at June month end.  Investment grade and high yield credit spreads were little changed in July (see page 13).
In commodities, the GSCI index was down 14.1% in July (see page 11), with losses in Energy (-17.4%), Agriculture (-12.4%), Industrial Metals (-6.9%), Precious Metal (-6.6%), and Livestock (-2.4%).  Within individual commodities, Crude Oil (-21.5%), Wheat (-18.9%), and Brent Crude (-18.2%) led losses, while Lean Hogs (+0.5%) moved slightly higher.  Gold was down 6.7% in July.

Contact CurAlea Associates for a Daily Market Review.

Wednesday, July 1, 2015

June 2015 - Monthly Market Commentary

June was another mixed month for global risk assets. Developed and emerging market equities mostly retreated, small caps outperformed large caps, the US Dollar weakened, commodities were mixed, and US interest rates moved higher. US job growth continued to rebound, as the June jobs report showed that employers added 280,000 positions in May with upward revisions for April and March; the unemployment rate increased to 5.5% as the growth in the number of job seekers outpaced jobs available. At the Federal Reserve’s June policy meeting, the central bank signaled that it’s on track to raise interest rates for the first time since 2006 as early as September, but that the pace of future increases is likely to be more gradual than it previously anticipated.

Notable corporate transactions announced in June included a $16.7 billion purchase of Altera by Intel, General Electric’s $12 billion sale of its private equity lending unit to CPPIB, Tokio Marine’s $7.5 billion acquisition of HCC Insurance, the $5.2 billion merger of Standard Pacific and Ryland Group, Hudson Bay’s $3.2 billion purchase of Galeria Kaufhof from Metro, Allergan’s $2.1 billion acquisition of Kythera Biopharmaceuticals, Intel’s $175 million purchase of Recon, the $353 million sale of Martha Stewart Living to Sequential Brands Group, General Electric’s $6.9 billion sale of its fleet management businesses in the US, Mexico, Australia and New Zealand to Element Financial, the $18 billion merger of Willis Group and Towers Watson, and the $29 billion merger of Ahold and Delhaize.

Developed market equity markets were lower in June (see page 8); Australia (-4.6%), the UK (-3.6%) and Canada (-2.9%) saw the biggest losses. US small caps outperformed, with the Russell 2000 up 0.7% and the S&P500 down 1.9% (see page 2). Consumer Discretionary (+0.6%), Healthcare (-0.3%), and Financials (-0.3%) were the best performing sector in June, while Utilities (-6%), Information Technology (-4.3%), and Materials (-3.9%) were the worst performing (see page 2). Large cap growth (-1.8%) slightly outperformed large cap value (-2%) in May (see page 3). Emerging Market equities were mixed in June (see page 9), with the biggest gains in Russia (+1.9%), Brazil (+1%), and Mexico (+0.8%); Indonesia (-6.4%), China (-5.6%), and Argentina (-4.3%) were the worst performing.

In currencies, the USD Index weakened 1.5% in June (see page 10). The weakest developed market currencies against the USD were the New Zealand Dollar (-4.8%), Norwegian Krone (-1.1%), and Canadian Dollar (-0.3%), while the British Pound (+2.8%), Swedish Krona (+2.7%), and Euro (+1.5%) strengthened against the USD. The USD was also mixed against emerging market currencies with the biggest losses seen in the Russian Ruble (-5.4%), Malaysian Ringgit (-2.6%), and the Mexican Peso (-2.3%); the Brazilian Real (+2.4%) and Indian Rupee (+0.3%) strengthened against the USD (see page 10).

The US Treasury yield curve steepened in June (see page 12). 10 year rates closed the month at 2.35%, up from 2.12% at May month end. Investment grade and high yield credit spreads moved higher in June (see page 13).

In commodities, the GSCI index was down 0.1% in June (see page 11), with gains in Agriculture (+15.5%) and losses in Industrial Metals (-5%), Livestock (-4.7%), Energy (-2.3%), and Precious Metals (-2.1%). Within individual commodities, Wheat (+27.5%), Corn (+17.7%), and Soybeans (+14.3%) led gains, while Palladium (-13.4%), Lean Hogs (-10.3%), and Silver (-7%) saw the biggest losses. Gold was down 1.5% in June.

Contact CurAlea Associates for a Daily Market Review.

Monday, June 1, 2015

May 2015 - Monthly Market Commentary

May was another mixed month for global risk assets.  Developed market equities outperformed emerging market equities, small caps outperformed large caps, the US Dollar strengthened, and commodities retreated.  Job growth rebounded, as the May jobs report showed that employers added 223,000 positions in April and the unemployment rate decreased to 5.4%.  Q1 GDP growth was revised down from the original estimate of positive 0.2% to negative 0.7%.  Minutes from the April Federal Reserve policy meeting showed that most officials viewed this weakness as being caused by temporary factors such as a cold winter and disruptions at West Coast ports and that a rebound was likely.  Most analysts now expect no increase in interest rates until September at the earliest, with some suggesting that we may not see any increase in rates until 2016.
Notable corporate transactions announced in May included a $8.4 billion purchase of Synageva by Alexion, DTZ’s $2 billion acquisition of Cushman & Wakefield, Noble Energy’s $2.1 billion purchase of Rosetta Resources, AOL’s $4.4 billion sale to Verizon, Williams’ $33 billion purchase of affiliate Williams Partners, Danaher’s $13.8 billion acquisition of Pall Corp., Owens-Illinois’ $2.2 billion purchase of the food and beverage glass container business of Vitro, Ann Inc.’s $2.2 billion sale to Ascena Retail Group, Endo International’s $8 billion purchase of Par Pharmaceutical, Alrice’s $9.1 billion purchase of a controlling interest in Suddenlink, CVS Health’s $12.7 billion acquisition of Omnicare, Charter Communications’ $55 billion merger with Time Warner Cable, EMC’s $1.2 billion acquisition of Virtustream, and Avago’s $37 billion purchase of Broadcom.
Developed market equity markets were mixed in May (see page 8).  Japan (+5%), Italy (+2.1%), and the S&P500 (+1.2%) saw the biggest gains, while Canada (-1.6%), Spain (-1.2%) and Germany (-0.7%) saw the biggest losses.  US small caps outperformed, with the Russell 2000 up 2.3% (see page 2).  Healthcare (+4.5%), IT (+2.3%), and Financials (+1.8%) were the best performing sectors in May, while Energy (-4.8%), Telecom (-1.8%), and Industrials (+0.3%) were the worst performing (see page 2).  Large cap growth (+1.4%) slightly outperformed large cap value (+1.2%) in May (see page 3).  Emerging Market equities were mixed in May (see page 9), with the biggest gains in Indonesia (+4.8%), India (+3.4%), and Mexico (+0.8%); Argentina (-8.6%), Brazil (-6%), and Russia (-4.3%) were the worst performing. 
In currencies, the USD Index strengthened 2.4% in May (see page 10) and was stronger against all major developed market currencies.  The weakest developed market currencies against the USD were the New Zealand Dollar (-6.7%), Japanese Yen (-3.8%), and Australian Dollar (-3.3%).  The USD was also stronger against most emerging market currencies with the biggest losses seen in the Brazilian Real (-5.2%), Korean Won (-3.3%), and Malaysian Ringgit (-2.3%); the Turkish Lira (+0.3%) strengthened against the USD (see page 10).
The US Treasury yield curve steepened in May (see page 12).  10 year rates closed the month at 2.12%, up from 2.03% at April month end.  Investment grade and high yield credit spreads were little changed in May (see page 13).
In commodities, the GSCI index fell 2% in May (see page 11), with gains in Livestock (+2.5%) and Precious Metals (+0.9%) and losses in Industrial Metals (-7.9%), Agriculture (-3.5%) and Energy (-1.5%).  Within individual commodities, Cocoa (+4.8%), Feeder Cattle (+3.8%), and Silver (+3.4%) led gains, while Aluminum (-11%), Sugar (-9.1%), and Coffee (-8.2%) saw the biggest losses.  Gold was up 0.5% in May.
Contact CurAlea Associates for a Daily Market Review.

Friday, May 1, 2015

April 2015 - Monthly Market Commentary

April was a very mixed month for global risk assets. Emerging market equities outperformed developed market equities, large caps outperformed small caps, energy equities rebounded on the back of a sharply stronger oil complex, and the US Dollar retreated. The month started with a weak US jobs report, which showed that 126,000 new jobs were added in March, the slowest pace in 15 months. This brought down average monthly job growth for Q1 to 197,000, down from 324,000 in Q4. Late in the month, Q1 GDP growth was reported to have slowed to just 0.2%, down from 2.2% in Q4; analysts blamed the weakness on winter weather, a strong dollar, the West Coast port labor dispute, and weaker energy investment. The Federal Reserve suggested that many of these factors were ‘transitory’ and that economic growth should accelerate as the year progresses, though it appears that a mid-year interest rate hike is now off the table.

Notable corporate transactions announced in April included a $5 billion buyout of Informatica by Permira and CPPIB, Fedex’s $4.8 billion acquisition of TNT Express, Royal Dutch Shell’s $60 billion purchase of BG Group, GE’s $30 billion sale of real estate holdings to Blackstone and Wells Fargo, LinkedIn’s $1.5 billion acquisition of Lynda.com, Blackstone’s $1 billion purchase of Excel Trust, Nokia’s $16.6 billion acquisition of Alcatel-Lucent, Prologis’ $5.9 billion purchase of KTR Capital, Raytheon’s acquisition of Websense as part of $1.7 billion investment in cybersecurity, Brookfield’s $1.7 billion purchase of Associated Estates, and Ship Finance’s $272 million purchase of eight dry bulk carriers from Golden Ocean Group.

Developed market equity markets were mixed in April (see page 8). Hong Kong (+9.1%), Japan (+3.3%), and the UK (+3.3%) saw the biggest gains, while Germany (-4.4%), Australia (-2%) and Spain (-0.8%) saw the biggest losses. US small caps underperformed, with the Russell 2000 down 2.6% (see page 2). Energy (+6.6%), Telecom (+5.9%), and Materials (+3.1%) were the best performing sectors in April, while Health Care (-1.3%), Consumer Staples (-0.8%), and Utilities (-0.4%) were the worst performing (see page 2). Large cap growth (+0.5%) slightly underperformed large cap value (+0.9%) in April (see page 3). Emerging Market equities were mixed in April (see page 9), with the biggest gains in China (+16.6%), Brazil (+9.6%), and Russia (+6.6%); Indonesia (-10.6%), India (-5.1%), and the Philippines (-3.1%) were the worst performing.

In currencies, the USD Index weakened 3.8% in April (see page 10) and was weaker against all major developed market currencies. The strongest developed market currencies against the USD were the Norwegian Krone (+7%), Canadian Dollar (+5.1%), and Euro (+4.6%). The USD was also weaker against most emerging market currencies with the biggest gains seen in the Russian Ruble (+12.7%), Brazilian Real (+6%), and Malaysian Ringgit (+3.8%); the Turkish Lira (-2.8%), Indian Rupee (-1.9%), and Thai Baht (-1.4%) weakened against the USD (see page 10).

The US Treasury yield curve steepened in April (see page 12). 10 year rates closed the month at 2.03%, up from 1.92% at March month end. Investment grade and high yield credit spreads were little changed in April (see page 13).

In commodities, the GSCI index rose 11.1% in April (see page 11), with gains in Energy (+17.4%), Industrial Metals (+7.9%), and Livestock (+0.7%) and losses in Agriculture (-1.6%) and Precious Metals (-0.4%). Within individual commodities, Crude Oil led gains (+21.3%), followed by Brent Crude (+18.3%), and Heating Oil (+15.6%); Wheat (-7.1%), Corn (-4.6%), and Silver (-2.9%) moved lower. Gold was down 0.1% in April.

Contact CurAlea Associates for a Daily Market Review.

Wednesday, April 22, 2015

CurAlea Associates LLC Wins Four Prestigious Industry Awards in Past Six Months




CurAlea Associates LLC Wins Four Prestigious Industry Awards In Past Six Months

PRINCETON – CurAlea Associates LLC has been named the winner of four prestigious hedge fund industry awards in the past six months by Acquisition International and Corporate LiveWire. 

Princeton, New Jersey based CurAlea Associates LLC was established in 2010 to provide customized risk advisory and software services to hedge funds and family offices.  The firm delivers high touch, high value-added services to clients via quantitative portfolio risk analyses and qualitative interpretations of portfolio risk.

CurAlea's hedge fund clients are principally fundamentally based and have aggregate AUM of approximately $45 billion.  While hedge funds remain the primary area of the firm’s focus, CurAlea has also been retained by banks and family offices for hedge fund due diligence, risk analysis, and asset allocation consulting.  CurAlea works with clients on a project specific basis and on an ongoing retainer basis.

As part of its customized risk consulting and software services, CurAlea helps hedge fund managers better understand both aggregate portfolio risks as well as risk contribution at the sector and position level.  CurAlea also offers perspective on whether client portfolio risk levels are consistent with their long term return objectives.  Importantly, CurAlea customizes its analyses and software to meet specific client needs and requests.

On winning these four awards, co-founder Pete Ort said: “We are delighted to be recognized by Acquisition International, Corporate LiveWire, and our clients.  We are proud of the customized risk advisory and software solutions that we provide to our clients and it is rewarding to be recognized as leaders in our industry."

Additional information is available at www.curaleaassociates.com
Acquisition International - Best for Hedge Fund Focused Risk Management – New York


In March 2015, CurAlea Associates was named Best for Hedge Fund Focused Risk Management – New York in the 2015 Acquisition International Business Excellence Awards.

Voted for by a worldwide network of professionals, advisers, clients, peers and business insiders, the Acquisition International Business Excellence Awards celebrate the individuals and firms whose commitment to excellence sees them exceeding clients’ expectations on a daily basis while setting the bar for others in their industry.

Through these awards, Acquisition International looks to identify and honor the most respected companies and their C-level executives, while recognizing and rewarding outstanding success, innovation and ethics across international business communities.

Corporate LiveWire - Most Outstanding Risk Management Software Firm – USA
In March 2015, CurAlea Associates was named Most Outstanding Risk Management Software Firm - USA in the 2015 Corporate LiveWire M&A Awards.

The Corporate LiveWire Awards represent the pinnacle of business achievement, championing the best in their respective fields. All winners of the International M&A awards are subject to the same rigorous assessment criteria, carried out by experienced in-house professionals. This ensures that only the most deserving firms and individuals walk away with one of these prestigious accolades and gain a place in the awards winners’ guide, which is distributed to over 400,000 M&A professionals.

Corporate LiveWire - Excellence in Hedge Fund Risk & Due Diligence – USA
In February 2015, CurAlea Associates was recognized for Excellence in Hedge Fund Risk & Due Diligence - USA in the 2015 Corporate LiveWire Innovation & Excellence Awards.

The Corporate LiveWire Awards represent the pinnacle of business achievement, championing the best in their respective fields. All winners of the Innovation & Excellence awards are subject to the same rigorous assessment criteria, carried out by experienced in-house professionals. This ensures that only the most deserving firms and individuals walk away with one of these prestigious accolades and gain a place in the awards winners’ guide, which is distributed to over 1.5 million business executives.


Acquisition International - Best for Risk Management – New Jersey

In November 2014, CurAlea Associates was named Best for Risk Management – New Jersey in the 2015 Acquisition International Hedge Fund Awards.

Now in their third year, the Acquisition International Hedge Fund Awards were created to highlight excellence, best practice and innovation across the asset class, and to win one of these prestigious awards is a stamp of business excellence, integrity and leadership. Acquisition International receives thousands of nominations from industry experts, clients, and peers and spends months gathering votes, painstakingly researching all nominees, and collating all relevant information so that they can fairly and accurately determine the winners.

Wednesday, April 1, 2015

March 2015 - Monthly Market Commentary


March was a mixed month for global risk assets.  Global equity markets were mixed, US small caps outperformed large caps, energy commodities retreated, credit spreads widened, and US Treasuries gained.  The Federal Reserve surprised investors with a more dovish than expected statement; while the Fed removed the word ‘patient’ from its plans to increase interest rates, Chairwoman Yellen explained that this “doesn’t mean we’re going to be impatient”.  Earlier in the month, the US monthly jobs report showed continued strong hiring in February with a 295,000 advance in payrolls; the unemployment rate fell to 5.5%, the lowest level since March 2008.  This was the 12th straight month that more than 200,000 jobs were added, the longest such streak since 1995.  In Europe, the ECB launched its long-awaited quantitative easing program with monthly purchases of 60 billion euros; European equities outperformed in March.  Not to be outdone, Sweden’s Riksbank lowered its benchmark rate to minus 0.25% and said it would buy 30 billion Swedish kronor; the kronor fell 3.4% against the USD on the month.

Global M&A activity continued apace in March.  Notable announced deals included NXP Semiconductors’ acquisition of Freescale Semiconductor for $11.8 billion, Hewlett-Packard’s purchase of Aruba Networks for $2.7 billion, Springleaf Holdings’ acquisition of Citigroup’s OneMain Financial unit for $4.25 billion, AbbVie’s $21 billion purchase of Pharmacyclics, Alcoa’s acquisition of RTI International Metals for $1.26 billion, Verisk Analytics’s $2.8 billion purchase of Wood Mackenzie from Hellman & Friedman, the $6.26 billion purchase of GE Capital’s consumer lending business in Australia and New Zealand by an investor group including KKR and Deutsche Bank, Lexmark’s acquisition of Kofax for $1 billion, the $49 billion merger of Kraft and Heinz, Dow Chemical’s $5 billion split off of a significant portion of its chlorine business and merger with Olin, Dufry’s $3.9 billion purchase of World Duty Free, UnitedHealth’s $12.8 billion acquisition of Catamaran, and Charter Communications’ $10.4 billion purchase of Bright House Networks.

Developed market equity markets were mixed March (see page 8).  Germany (+4.8%), Spain (+3.6%), and Italy (+2.9%) saw the biggest gains, while the UK (-2%), Canada (-1.9%) and the S&P 500 (-1.6%) saw the biggest losses.  US small caps outperformed, with the Russell 2000 up 1.7% (see page 2).  Healthcare (+0.9%) was the only US sector in positive territory in March, while Materials (-4.7%), Telecom (-3.7%), and IT (-3.3%) were the worst performing (see page 2).  Large cap growth (-1.1%) slightly outperformed large cap value (-1.4%) in March (see page 3).  Emerging Market equities were also mixed in March (see page 9), with the biggest gains in Argentina (+9.7%), the Philippines (+2.7%), and Indonesia (+2.6%); Russia (-7.4%), India (-2.9%), and Taiwan (-1.1%) were the worst performing.  

In currencies, the USD Index strengthened 3.2% in March (see page 10).  The weakest developed market currencies against the USD were the Norwegian Krone (-4.6%), Euro (-4.2%), and British Pound (-4%).  The USD was also stronger against most emerging market currencies with the biggest gains against the Brazilian Real (-10.7%), Turkish Lira (-3.4%), and Malaysian Ringgit (-2.4%); the Russian Ruble (+8.3%), Chinese Yuan (+1.1%), and Taiwan Dollar (+0.6%) strengthened against the USD (see page 10).

The US Treasury yield curve flattened in March (see page 12).  10 year rates closed the month at 1.92%, down from 1.99% at February month end.  Investment grade and high yield credit spreads widened in February (see page 13).

In commodities, the GSCI index fell 6.8% in March (see page 11), with gains in Livestock (+3.1%) and losses in Energy (-10%), Agriculture (-4.3%), Precious Metals (-2.2%) and Industrial Metals (-0.1%).  Within individual commodities, Feeder Cattle led gains (+9%), followed by Live Cattle (+6.1%), and Copper (+2.6%); Sugar (-13.4%), Brent Crude (-12.3%), Heating Oil (-12.3%), Cocoa (-10.5%), and Gasoline (-10.3%) moved lower.  Gold was down 2.6% in March.

Contact CurAlea Associates for a Daily Market Review.

Monday, March 2, 2015

February 2015 - Monthly Market Commentary

February was a strong month for global risk assets.  Equity markets rallied sharply, energy commodities rebounded from recent lows, and credit spreads tightened, while the safe havens of US Treasuries and Gold retreated.  Though global investors fretted briefly about the possibility of a Greek default and the ongoing civil war in Ukraine, both situations calmed by month end, with a four month bailout extension in Greece and a cease fire announced (though not entirely implemented) in Ukraine.  The US monthly jobs report showed continued strong hiring in January with a 257,000 advance in payrolls; the unemployment rate ticked up to 5.7%.  Towards the end of the month, Federal Reserve chair Yellen testified before Congress and indicated that the central bank is considering interest rate hikes on a meeting by meeting basis; investors largely interpreted her remarks as dovish, with most delaying their expectations for the first increase in interest rates since 2006 until September or October.
Global M&A activity remained strong in February.  Notable announced deals included SS&C’s acquisition of Advent Software for $2.7 billion, Staples’ purchase of Office Depot for $6.3 billion, BT Group’s acquisition of mobile operator EE from Deutsche Telekom and Orange for $19 billion, Pfizer’s purchase of Hospira for $17 billion, Verizon’s sale of a package of landline assets to Frontier Communications for $10 billion and wireless towers to American Tower for $5 billion, Harris Corp’s acquisition of Exelis for $4.8 billion, TPG’s sale of EnvisionRx to Rite Aid for $2 billion, Expedia's purchase of Orbitz for $1.3 billion, Ambang Insurance Group’s purchase of a majority stake in Tong Yang Life Insurance for $1 billion, Berkshire Hathaway’s acquisition of Detlev Louis Motorradvertriebs GmbH for approximately $400 million, Valeant Pharmaceuticals’ purchase of Salix Pharmaceuticals for $10 billion, and Stifel Financial’s acquisition of Sterne Agee for $150 million .
Developed market equity markets rose strongly in February (see page 8).  Italy (+9%), Japan (+7.9%), and Spain (+7.8%) saw the biggest gains, while the S&P 500 rose 5.7%.  US small caps slightly outperformed, with the Russell 2000 up 5.9% (see page 2).  Consumer Discretionary (+8.6%), IT (+8.2%), and Materials (+8%) were the best performing US sectors, while Utilities (-6.4%), Energy (+4.1%), and Consumer Staples (+4.2%) were the worst performing (see page 2).  Large cap growth (+6.7%) outperformed large cap value (+4.8%) in February (see page 3).  Emerging Market equities were almost all higher in February (see page 9), with the biggest gains in Argentina (+20.2%), Russia (+10.7%), and Brazil (+9.5%); Thailand (-0.5%), Korea (+0.9%), and the Philippines (+1.4%) were the worst performing. 
In currencies, the USD Index strengthened 0.5% in February (see page 10).  The weakest developed market currencies against the USD were the Swiss Franc (-3.5%), the Japanese Yen (-1.7%), and the Euro (-0.8%), while the New Zealand Dollar (+4.2%), British Pound (+2.5%), and Canadian Dollar (+1.8%) strengthened against the USD.  The USD was weaker against most emerging market currencies with the biggest gains in the Russian Ruble (+10%), Thai Baht (+1%), and the Indian Rupee (+0.9%) (see page 10); the Brazilian Real (-6.1%), Turkish Lira (-2.6%), and Indonesian Rupiah (-2%) weakened against the USD.
The US Treasury yield curve steepened in February (see page 12).  10 year rates closed the month at 1.99%, up from 1.64% at January month end.  Investment grade and high yield credit spreads tightened in February (see page 13).
In commodities, the GSCI index rose 6.5% in February (see page 11), with gains in Energy (+10.9%), Agriculture (+2%), and Industrial Metals (+0.6%); losses were seen in Livestock (-2.3%) and Precious Metals (-5%).  Within individual commodities, Heating Oil led gains (+17.9%), followed by Gasoline (+15.9%), Brent Crude (+14.9%), and Cocoa (+12.1%); Coffee (-14.7%), Sugar (-6.6%), Lean Hogs (-6.6%), and Gold (-5.2%) moved lower.

Contact CurAlea Associates for a Daily Market Review.