Asset Class Performance This Week, YTD, and Election Day ...

All the Presidents Win

? Stocks were up again this week with the S&P 500 (SPY) pushing higher by another 1.27%. Since Election Day 2020, SPY is now up 17.35%. We'd say that's pretty good, but notably, every other country ETF highlighted in the matrix below is up even more than that since Election Day. Brazil (EWZ), Russia (RSX), Italy (EWI), India (PIN), and China (ASHR) have seen the biggest gains at 26%+. China (ASHR) was up another 7.26% this week alone.

? In the US this week, small-caps once again outperformed along with Energy, Technology, Financials, and Communication Services.

? Treasuries, Utilities, the Yen, natural gas, and gold are the only areas to decline since Election Day.

Asset Class Performance This Week, YTD, and Election Day - Total Return (%)

US Related ETF Description SPY S&P 500 DIA Dow 30 QQQ Nasdaq 100 IJH S&P Midcap 400 IJR S&P Smallcap 600 IWB Russell 1000 IWM Russell 2000 IWV Russell 3000

This Week 1.27 1.12 1.54 2.72 3.59 1.54 2.53 1.64

YTD 5.02 3.07 7.24 10.45 16.03 5.75 15.91 6.41

Election Day 17.35 15.23 22.72 28.92 41.83 19.50 42.27 20.87

IVW S&P 500 Growth

1.05

IJK Midcap 400 Growth

2.70

IJT Smallcap 600 Growth 3.96

IVE S&P 500 Value

1.52

IJJ Midcap 400 Value

2.65

IJS Smallcap 600 Value

3.38

DVY DJ Dividend

1.74

RSP S&P 500 Equalweight 2.08

5.37 10.76 16.96 4.49 10.05 15.07 7.36 6.09

17.29 27.65 42.99 17.54 30.59 40.56 20.35 21.02

FXB British Pound FXE Euro FXY Yen

0.79

1.24 6.18

0.56

-0.92 3.27

0.42

-1.69 -0.50

XLY Cons Disc XLP Cons Stap XLE Energy XLF Financials XLV Health Care XLI Industrials XLB Materials XLK Technology XLC Comm Services XLU Utilities

-1.11 -0.11 4.96 2.04 1.39 1.47 1.10 2.42 2.23 -1.53

5.93 -2.61 17.86 6.92 3.39 1.98 2.69 6.59 8.18 -0.13

15.96 3.04 53.33 27.51 12.16 13.03 12.69 22.82 21.76 -2.34

Global ETF Description EWA Australia EWZ Brazil EWC Canada ASHR China EWQ France EWG Germany EWH Hong Kong PIN India EWI Italy EWJ Japan EWW Mexico EWP Spain RSX Russia EWU UK

This Week 1.29 -0.55 2.62 7.26 1.30 0.95 2.65 2.22 1.74 3.32 0.97 -0.84 1.93 2.48

YTD 4.93 -2.81 6.61 14.00 2.77 3.71 8.60 6.89 5.06 5.91 -1.12 -0.18 5.22 4.27

Election Day 23.51 31.92 21.46 26.49 22.63 21.28 21.80 26.00 28.71 19.54 24.29 24.00 29.51 22.05

EFA EAFE EEM Emerging Mkts IOO Global 100 BKF BRIC

2.14

4.59 20.73

2.77 11.86 28.41

0.79

5.17 18.85

3.57 14.71 25.59

DBC Commodities USO Oil UNG Nat. Gas GLD Gold SLV Silver

2.84 11.02 25.93

4.58 20.99 49.48

1.33 15.98 -8.10

0.52

-4.30 -4.60

1.44

3.01 12.79

SHY 1-3 Yr Treasuries IEF 7-10 Yr Treasuries TLT 20+ Yr Treasuries AGG Aggregate Bond BND Total Bond Market TIP T.I.P.S.

-0.01 -0.03 -0.62 -0.11 -0.14 -0.05

0.02 -1.74 -6.63 -1.20 -1.37 0.00

0.11 -1.59 -6.39 -0.06 -0.14 2.03



The Bespoke Report 2/12/21 Page 1 of 28

For Personal Use Only--Do Not Forward or Redistribute

? The S&P 500's late-day strength to close out the week heading into the long President's Day weekend shows there's plenty of thirst to put money to work. Below are updates of three of our favorite breadth measures that we use to help gauge the health of US equities.

? The S&P 500's cumulative advance/decline line shows the number of daily advancers minus decliners over the last 12 months. After a brief dip to end January, this reading has picked right back up and made new highs, meaning we're seeing broad participation.

4000 3700 3400 3100 2800 2500 2200

2/10

S&P 500 vs Cumulative A/D Line: Last 12 Months

5/10 S&P 500 (Left Axis)

8/10

11/10

Cumulative A/D Line (Right Axis)

5000 4000 3000 2000 1000 0 -1000 -2000 -3000 -4000 2/10

? High yield spreads (the

S&P 500 vs High Yield Spreads: Since March 23rd

yield on junk bonds vs. 4000

High yield spreads tracking trends in equity

300

risk-free rates) are an-

market. Lowest spreads since the pandemic.

400

other tracker we watch 3700

500

for divergence or confir- 3400 mation of equity market

600

trends. For now, high 3100

700

yield spreads continue to 2800

800

suggest a healthy up-

trend for stocks.

2500

S&P 500 - Left Axis High Yield Spreads (bps) - Right Axis (Inverted)

900 1,000

2200

1,100

3/23

5/23

7/23

9/23

11/23

1/23

? The relative strength of semiconductors vs. the 190 S&P 500 is another market signal we follow 170

Relative Strength: Semis vs S&P 500 (Last 12 Months)

3800

closely. We want to see

3400

semis leading the broad- 150

er market, and as shown 130 at right, the relative

strength for semis made 110

Semis vs S&P 500

3000 2600

a huge recovery to new

S&P 500 (Right Axis)

highs this week.

90

2200

1/20

3/20

5/20

7/20

9/20

11/20

1/21



The Bespoke Report 2/12/21

For Personal Use Only--Do Not Forward or Redistribute

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? Since the bull market coming out of the Financial Crisis began in March 2009, the S&P 500's price is up 479%. As shown below, the move higher for small-caps over the last year has pushed the Russell 2,000's performance over the same time frame up to 566%.

? As shown in the second chart below, small-caps outperformed large-caps for most of the bull market up until mid-2018, but from then until the bottom of the COVID Crash, large-caps saw huge outperformance.

? Since COVID, we've seen small-caps come roaring back to where they are now outperforming large -caps by their widest margin since the March 2009 lows.

S&P 500 (Large Caps) vs. Russell 2,000 (Small Caps) Since March '09 Bull Market Began

600

500

S&P 500 (479%)

400

Russell 2,000 (566%)

300

200

100

0

S&P 500/Russell 2,000 Performance Spread Since March '09 Bull Market Began

80

60

40

Large-caps outperforming small-caps

20

0

-20

-40

-60

-80

Small-caps outperforming large-caps

-100



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For Personal Use Only--Do Not Forward or Redistribute

Page 3 of 28

? Here's a stat for you. In each of the last five months, the Russell 2,000 has been up at least 5% through the month's first six trading days. In the history of the index back to 1979, there had never been more than two months in a row of 5%+ gains through the first six trading days. This type of rotation into small-caps is nearly unprecedented.

Russell 2000 MTD Performance After Six Trading Days (%): 1979 - 2021

15

10

5

0

-5

-10

-15

-20 '79 '81 '83 '85 '87 '89 '91 '93 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21

? This type of rapid outperformance from small-caps comes with a warning sign, however. Below we show the spread between the 100-day rate of change of the Russell 2,000 and the S&P 500. Over the last 100 days, the Russell has outperformed the S&P by more than 30 percentage points. As shown, the only other time in history that we've seen greater outperformance was at the peak of the Dot Com Bubble.

40 30 20 10

0 -10 -20 -30

'82

100-Day Rate of Change: Russell 2000 vs S&P 500

Performance Spread (Percentage Points) 3/9/00

'86 '90 '94 '98 '02 '06 '10 '14 '18



The Bespoke Report 2/12/21

For Personal Use Only--Do Not Forward or Redistribute

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? One of the biggest stories in markets to start 2021 has been an epic short squeeze in heavily shorted names like GameStop (GME). This week the most recent short interest numbers were published, and as expected, we saw big drops in short interest across the board. This highlights how much shorts were forced to cover as prices ran up in January.

? The decile of stocks in the Russell 3,000 that were most heavily shorted to start 2021 saw the biggest declines in short interest during the month of January. And every industry group but one saw a decline in short interest during the month.

? The action in GME and other "meme" stocks appears to have scared the daylights out of shorts.

? Market sentiment where investors are scared to be short can actually be detrimental during market drops because when prices are falling, the more shorts there are, the more support there is on the bid side as shorts look to cover (profitably). Having a lot less shorts in the market could mean bigger drops during volatile times.

Median Change in SI as % of Float From 12/31/20 - 1/30/21

Russell 3000 Deciles: SI as % of Float At End of 2020

0.5

0.04

0.0

-0.5

-0.31

-0.21

-0.09

-0.08

-0.02

0.00

-0.53

-1.0

-0.74

-1.5

-2.0

-2.5

-3.0 -2.65

1

2

3

4

5

6

7

8

9

10

Highest SIPF as of 12/31/20

Lowest SIPF as of 12/31/20

Russell 3000 Industry Groups Aggregate Short Interest as % of Float

9

8

Current

7

6

5

4

3

2

1

0



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For Personal Use Only--Do Not Forward or Redistribute

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