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a ROCKEFELLER NY ASSET MANAGEMENT November 1, 2017 A “Vixing” Puzzle | Market’s unusual lack of volatility; Be fearful when others are greedy ctober has historically been a spooky month in which some of the biggest market declines took place — the crash of 1929, 1987’s Black Monday, the financial crisis of 2008, etc. This October, however, there were only treats and no tricks — the biggest one-day movement for the S&P 500 Index during the month was a 0.81% gain, and the biggest down day had a mere 0.47% drop. That said, there was quite a bit of turbulence among individual stocks. The Information Technology sector had a huge month, with the so-called FANG stocks (Facebook, Amazon, Netflix, Google) leading the way up, while some old economy bellwethers and the much beleaguered brick and mortar retailers took a beating. The rising hope of U.S. tax reform and the continued strength of the global economic expansion lifted U.S. Treasury yields as well as commodity prices from oil to copper. The U.S. reflation expectation also boosted the greenback. European sovereign bond yields and the euro declined after ECB President Draghi announced a reduction in monthly asset purchases starting in 2018, but promised a longer duration of QE. China completed its quinquennial leadership transition at the conclusion of the 19th Party Congress, which should usher in a new era with more focus on the quality of growth over the quantity. President Xi now awaits President Trump’s State visit to Beijing on November 8'4, Investors will likely be focused on issues ranging from trade to North Korea, though major breakthroughs appear unlikely. Lastly, there is still one unresolved sleeper issue that may come back to roil the market — will a new bipartisan deal be reached in time to fund the U.S. government beyond December 8, when the current continuing resolution expires? arket Review JIMMY CHANG, CFA Chief Investment Strategist 212-549-5218 jchang@rockco.com Equity Markets Indices’ 9 or ie 7 10/ orice, 7 Chonae aor MSCI All Country World 487 497 2.0% 17.7% S&P 500 2519 2575 2.2% 15.0% MSCI EAFE 1974 2003 1.5% 18.9% Russell 20002 1491 1503 0.8% 10.7% NASDAQ 6496 6728 3.6% 25.0% TOPIX 1675 1766 5.4% 16.3% KOSPI 2394 2523 5.4% 24.5% Emerging Markets 1082 1119 3.5% 29.8% Fixed Income 2-Year US Treasury Note 1.49% 1.60% 12 41 10-Year US Treasury Note 2.33% 2.38% 5 -7 BarCap US Agg Corp Sprd 1.01% 0.95% -6 -28 BarCap US Corp HY Sprd 3.47% 3.38% -9 -71 Australian (AUD/$) 1.28 1.31 -2.3% 6.3% Brazil Real (Real/$) 3.16 o27 -3.3% -0.5% British Pound ($/GBP) 1.34 1.33 -0.9% 7.6% Euro ($/Euro) 1.18 1.16 -1.4% 10.7% Japanese Yen (Yen/$) 113 114 -1.0% 2.9% Korean Won (KRW/$) 1145 1120 2.2% 7.6% US Dollar Index (DXY) 93.08 94.55 -1.6% 8.1% Commodities Gold 1280 1271 -0.7% 10.3% Oil 51.7 54.4 5.2% 1.2% Natural Gas, Henry Hub 2.89 2.80 -3.0% -24.0% Copper (cents/Ib) 296 310 4.9% 23.8% CRB Index 183 188 2.4% -2.6% Baltic Dry Index 1356 1534 13.1% 59.6% SOURCE: BLOOMBERG MONTHLY MARKET REVIEW NOVEMBER 2017 1 HOUSE_OVERSIGHT_012095