Patiently Waiting for Mean Reversion In The Russell 2000

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  • government plans to deliver. This should help spur demand in the struggling economy. The Buenos Aires Stock Exchange Merval Index was up 6.14 percent this week.
  • Despite recent market corrections, global equity fund flows to China returned to positive territory with $1.13 billion influx for the past week ending September 10. This was the largest absolute amount within emerging markets as well as a reversal from marginal outflows recorded the previous week.


  • Brazilian equities suffered significantly this week on the back of poll data showing that incumbent President Dilma Rousseff is more-or-less tied with challenger Marina Silva. Previous polls, which showed Silva leading over Rousseff, were a positive sign for investors who view the incumbent’s socialist policies as counterproductive. However, now it seems that there is nothing but bad news coming out of Brazil, which is currently in recession and was recently downgraded by Moody’s. The Ibovespa Brasil Sao Paulo Stock Exchange Index was down 6.19 percent this week.
  • Colombia is planning on implementing a 2.25-percent annual tax on its wealthiest citizens. The tax reform will also extend a 0.4-percent financial transactions tax through 2018. The government’ tax reform is aimed at addressing budgetary concerns and is designed from proposals made by Thomas Piketty, in his bestselling book “Capital in the Twenty-First Century.” Colombia’s stock exchange, the Indice General de la Bolsa de Valores de Colombia, fell 1.99 percent this week.
  • Hong Kong was among the worst-performing countries in Asia this week. Weaker-than-expected August data on Chinese imports, inflation and aggregate financing rekindled investor concerns over sluggish domestic demand growth from China, incrementally diminishing efficacy of a targeted easing policy from its government.


  • Interest rate cuts and plans for a European Central Bank (ECB) asset-backed purchasing program continue to be an opportunity for growth in the struggling eurozone. Assuming the policies are successful in inciting inflation and stimulating growth in the eurozone, emerging markets will benefit as well. A significant export destination for many emerging markets, the eurozone’s strength is closely related to the health of the global economy overall.
  • The success story from Alibaba Group disseminated in its pre-initial public offering (IPO) roadshow, should remind investors of China’s world-leading growth in e-commerce and further monetization potential of the mobile Internet.  Leading Chinese Internet franchises may continue to benefit from positive investor sentiment heading into Alibaba’s debut next week.

Mean Reversion
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  • A report issued this week by the San Francisco Federal Reserve spooked markets. According to the report, low volatility in financial markets is a sign that investors may be underestimating how soon the Federal Reserve will raise interest rates. The report caused a selloff in emerging markets this week and, should it be accurate, poses a significant headwind for emerging markets which are vulnerable to higher rates in the U.S.
  • Since the Second-Child policy was approved in China earlier this year, eligible couples have been slow to embrace looser restrictions based on provincial statistics.  Growth prospects of China’s mass-consumer sector, such as infant foods and diapers, has significantly diminished due to structural migration to e-commerce and rising competition to name brands.
  • Weaker-than-expected Chinese imports growth in August may continue to be a challenge for neighboring countries in Asia that are more reliant on Chinese demand, especially Taiwan and South Korea, in the near term.

Leaders and Laggards

The tables show the weekly, monthly and quarterly performance statistics of major equity and commodity market benchmarks of our family of funds.

Weekly Performance
Index Close Weekly
10-Yr Treasury Bond 2.61 +0.15 +6.14%
Natural Gas Futures 3.85 +0.05 +1.42%
Nasdaq 4,567.60 -15.30 -0.33%
Korean KOSPI Index 2,041.86 -7.55 -0.37%
Russell 2000 1,160.61 -9.53 -0.81%
DJIA 16,987.51 -149.85 -0.87%
S&P 500 1,985.54 -22.17 -1.10%
Oil Futures 92.23 -1.06 -1.14%
S&P Basic Materials 312.60 -6.02 -1.89%
Hang Seng Composite Index 3,369.18 -77.02 -2.23%
S&P/TSX Canadian Gold Index 184.20 -4.22 -2.24%
Gold Futures 1,230.00 -37.30 -2.94%
S&P Energy 678.33 -26.31 -3.73%
XAU 91.66 -3.64 -3.82%
Monthly Performance
Index Close Monthly
10-Yr Treasury Bond 2.61 +0.19 +7.98%
Nasdaq 4,567.60 +133.47 +3.01%
DJIA 16,987.51 +335.71 +2.02%
S&P 500 1,985.54 +38.82 +1.99%
Russell 2000 1,160.61 +18.83 +1.65%
Natural Gas Futures 3.85 +0.02 +0.42%
S&P Basic Materials 312.60 +0.28 +0.09%
Korean KOSPI Index 2,041.86 -20.50 -0.99%
S&P Energy 678.33 -21.77 -3.11%
Oil Futures 92.23 -5.36 -5.49%
Gold Futures 1,230.00 -84.50 -6.43%
S&P/TSX Canadian Gold Index 184.20 -23.60 -11.36%
XAU 91.66 -12.17 -11.72%
Hang Seng Composite Index 3,369.18 -332.01 -14.83%
Quarterly Performance
Index Close Quarterly
Nasdaq 4,567.60 +256.95 +5.96%
Hang Seng Composite Index 3,369.18 +170.71 +5.34%
Korean KOSPI Index 2,041.86 +51.01 +2.56%
S&P 500 1,985.54 +49.38 +2.55%
DJIA 16,987.51 +211.77 +1.26%
S&P Basic Materials 312.60 +3.57 +1.16%
S&P/TSX Canadian Gold Index 184.20 +0.63 +0.34%
10-Yr Treasury Bond 2.61 +0.01 +0.27%
Russell 2000 1,160.61 -2.08 -0.18%
XAU 91.66 -0.64 -0.69%
Gold Futures 1,230.00 -44.90 -3.52%
S&P Energy 678.33 -36.50 -5.11%
Oil Futures 92.23 -14.68 -13.73%
Natural Gas Futures 3.85 -0.89 -18.82%


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