Tuesday, January 21, 2014

The Divergent Emergent Markets

Interpretation is always in the eyes of its beholder, although many times we find it's really as simple as, actions speak loudest. 

If one was to judge the actions of the markets over the past three years since the pivotal 2011-Q2 high in commodities and those markets closely associated with - you would come to the conclusion that their respective bond markets, who's thesis timeframes reach a bit further than their more capricious equity leaning cousins, have maintained a stalwart confidence in its longer-term outlook and story. 

It just might surprise some how much these debt instruments have consistently maintained a very wide envelope of outperformance (30-40%) over their respective equity markets. While we can appreciate a notable divergence as much as the next impressionable participant, in our eyes the relative strength and stability exemplified here is still broadly bullish over the long-term.