Some Market Observations

1.     Investor complacency appears to be prevalent, as the percentage of money-losing companies that have filed for IPO this year is the highest level on record, at 83%[i]

2.     However, the performances of these IPOs have been less than stellar – the Renaissance IPO index has begun to rollover, even as the major market indexes are at, or near, their highs[ii]

3.     Often looked to as an indicator of global demand, the CRB metals index is now down 15% from its recent peak[iii]

4.     In the most recent survey of fund managers from Bank of America-Merrill Lynch, cash holdings of private clients are at 3-year lows[iv]

5.     Emerging markets are looking more attractive, on a value basis, as they’re trading at a 30% discount to developed markets, when looking at forward P/E – historical norm is closer to 20%[v]

6.     Global liquidity continues to tighten, particularly with the Bank of Japan joining the QT party – the yield on their 10-year bond has surged 6-fold in the past 90 days[vi]

7.     Additionally, they announced this past week that they will be reducing the purchases of bonds with maturities of at least 25 years from ￥50 billion-￥150billion per month to ￥10 billion-￥100 billion per month[vii]

[i] Wall Street Journal, “IPO Market Has Never Been This Forgiving to Money-Losing Firms,” Oct. 1, 2018

[ii] SentimenTrader.com, “Daily Sentiment Report,” Oct. 3, 2018

[iii] Gluskin Sheff, “Breakfast with Dave,” Oct. 1, 2018

[iv] Gluskin Sheff, “Breakfast with Dave,” Oct. 1, 2018

[v] Gluskin Sheff, “Breakfast with Dave,” Oct. 1, 2018

[vi] Gluskin Sheff, “Breakfast with Dave,” Oct. 1, 2018

[vii] Gluskin Sheff, “Breakfast with Dave,” Oct. 1, 2018

[1] Nasdaq Dorsey Wright, “Daily Equity Report,” Oct. 1, 2008

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