Gavekal Capital: Stocks' Correlation to Real Interest Rates was the Most Significant Factor Driving Returns Last Week

Monday, June 9, 2014

Stocks' Correlation to Real Interest Rates was the Most Significant Factor Driving Returns Last Week

Real interest rates as measured by TIPS yields proved to be the most significant factor driving stock prices last week while other macro factors such as stocks' correlation to the Japanese yen and euro were also important. It is also noteworthy that the beta factor is making its way back to the top of the list after having been insignificant over the last one and three months. Below we show the top ten factors driving returns for each region.

MSCI World Index:

MSCI North America:

MSCI Europe:

MSCI Pacific:

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Gavekal Capital is a US registered investment advisory firm that manages the Gavekal Knowledge Leaders Strategy. Knowledge Leaders are a group of the world’s leading innovators with deep reservoirs of intangible capital. These companies often possess competitive advantages such as strong brand, proprietary knowledge or a unique distribution mechanism. Knowledge Leaders are largely service-based and advanced manufacturing businesses, often operating globally. Gavekal Capital seeks to identify the world’s leading knowledge companies through a proprietary process that analyzes corporate knowledge investments.
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