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News Archive
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May 24, 2010
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Global Asset Allocation themes pt2
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September 20, 2007
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Oil becoming a risk to consumer
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Corporate Spreads & Equities
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February 11, 2008
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Typically, peaks in BBB spreads coincide with the troughs in activity.Peaks in spreads have also coincided with troughs in profits.
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When BBB spreads peak equities typically perform extremely well. Since 1970, the average 12 month return for US equities in the 12 months following the peak in spreads has been 21.4%. Australian shares have risen an average 30%.
In terms of sector performance (based on the last 3 spread peaks), IT, consumer discretionary and financials have performed while energy and the more defensive sectors have underperformed. Looking at Australian sectors the result is similar but with financials and property joining the defensive sectors in underperforming.
 
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