Equity indices were mixed last week, with the S&P 500, Nasdaq, Dow and Russell 2000 returning -0.5%, -0.7%, +0.4% and +2.0%, respectively. The equal-weight S&P 500 gained about 1.1%, suggesting broader strength despite headline declines. Roughly two-thirds of S&P 500 constituents advanced, though the index is still ~3% off the high. Semiconductor shares remained under pressure amid concerns about AI spending, with the industry index down 3.2% on the week (and led lower by names like AMD, INTC, MRVL, SNDK, MU; Collectively up ~3% on the day, however, at time of writing). Terrorist attacks on Saudi Arabian energy infrastructure pushed Brent crude above $115/bbl and WTI above $100/bbl. The 10-year Treasury yield ended the week just under 5% (-10bps WoW). Investors now face a busy week of major technology earnings (notables include GOOGL, MSFT and AMZN) and the Federal Reserve’s rate decision (~90% probability of a rate hold, per CME FedWatch).
The Emerging Markets Trade: At Stenger Family Office, we do not view Emerging Markets as an appropriate strategic allocation for most of our clients. The unexpected outcome of Sunday’s presidential election in Brazil, and the subsequent volatility in Brazilian equities, is the latest case in point for this avoidance (iShares MSCI Brazil ETF (EWZ) down 21% on the day at time of writing Monday morning). While Emerging Markets in aggregate can provide spurts of outperformance (ex: MSCI EM), their elections pose recurring risks to equities that are largely absent from the United States. This is because U.S. equity markets are an immense, diversified store of value and critical to voter interests (~$79T and 40% larger than U.S. housing at $55T). Compare this size to Brazil’s index market cap of only ~$1.2T (at 10/23 close), where it would be roughly the size of Berkshire Hathaway prior to today’s crash. The lack of size in Emerging Markets and inherent instability make them susceptible to political upheaval in their respective regions. Nick compares the U.S. system and desirability to other countries on a prior episode of The Nick Stenger Show linked here: Ep 201 – The Real Problem With Socialism.
Financial Advisor in Chicago, IL
Stenger Family Office - Chicago Financial Advisors
150 N. Riverside Plaza
Suite 1950
Chicago, IL 60606
(630) 912-8295
Other office locations:Naperville, IL | Houston, TX | Baton Rouge, LA