Ending the 10s with tranquility | Flow Traders Investment Competition | Week 9

A continuation of trade optimism resulted in rising stock prices during a calm trading week due to Christmas, with several major indexes hitting new records. For example, the NASDAQ crossed the symbolic 9000 mark for the first time. Volatility remained subdued as there were no catalysts nor major economic releases to disrupt the market. Consumer discretionary shares outperformed within the S&P 500 Index, boosted by a healthy gain in Amazon.com, which represents almost a quarter of the sector’s market weighting. On Thursday, the retail and Web services giant recorded its best daily gain since the start of the year after reporting record holiday sales. Utilities shares lagged. 

The economic calendar was relatively light during the holiday week, but arguably it had a negative tone. Durable goods fell unexpectedly, as well as regional manufacturing indexes, indicating a slight contraction in the manufacturing sector. New home sales rose, but because of a lower revision of October sales. On the other hand, weekly jobless claims dropped for the second week in a row. 

As Europe-specific news flow was also limited, the “Santa” rally in U.S. stocks partially spilled over to European markets as well, resulting in a record-high STOXX 600 index. Japanese stocks were relatively unchanged for the week. The Nikkei 225 Stock Average gained 22 points and closed at 23,837.72. For the year to date, the Nikkei 225 is ahead about 19%. Chinese equities rallied for their fourth consecutive week as investor anticipate a partial U.S.-China trade deal in the coming period. Last Tuesday, President Trump mentioned that “the deal is done” and is “just being translated right now”. The details of this deal, however, remain to be published, and Chinese officials have indicated that it will be released after the official signing ceremony.

Looking ahead, for the upcoming week, important macroeconomic information will be released. U.S. consumer confidence, a measure of market sentiment, will be released on Tuesday. The manufacturing purchasing managers index (PMI) will be released on Friday, as well as the Federal Reserve’s December meeting minutes, which provide the latest monetary information.

Let’s take a look at what happened in the last 2019 update of the Flow Traders Investment Competition! Still leading in first place is Omega Investments with a 6.08% M2. They also had the largest weekly return of 1.49%, but should keep an eye on MBA Investors who took second place this week with an M2 of 5.44%. The biggest risers of this week are Alpha Investments and Conquistadores Capital who both rose 8 spots.

As a final note, with a few days left in 2019, and also this decade, we can look back and conclude that this year has been eventful and prosperous for global financial markets. Heading into 2020, the outlook remains moderately positive. The next decade will for sure bring plenty more and new challenges, but also opportunities to navigate. However, as history shows, investment challenges are best navigated with solid investment discipline, and a longer-term perspective.

The best wishes for 2020!

Amar Soebhag