Below is a list highlighting the year-to-date percentage change (in local currency) for the main stock market indices of 76 countries around the world.  Overall, 41 of 76 countries (54%) are in positive territory for the year, while the average country is now up 3.7% YTD.  Peru’s stock market is currently at the top of the list with a 2016 gain of 56.32%.  Brazil ranks 2nd at +32.95%, followed by Argentina (+31.90%) and Russia (+25.97%).  Namibia rounds out the top five with a YTD gain of 23.38%.

Of the G7 countries, Canada is on top with a gain of 13.56%.  The UK (yes, the UK) ranks second with a YTD gain of 9.08%, but remember, this is in local currency, so it doesn’t factor in the 12% drop that the pound has seen this year.  Priced in dollars, the UK’s stock market is down roughly 3.5% year to date.  Even that doesn’t seem too bad, though, given the Brexit freak-out that occurred at the end of June.

The US is the only other G7 country in the black this year with a gain of 6.59%.  Germany, France, Japan and Italy are all in the red, with Italy actually ranking dead last out of all countries at -21.82%.  China ranks second to last with a decline of 15.11%, but the other three BRIC countries are solidly in the black.

For much of 2015 and earlier this year, the high yield fixed income market and oil prices were joined at the hip. If you wanted to know what high yield was doing, one of the best real-time barometers of the sector’s performance was crude oil prices.  Since the start of the second half of the year, though, there has been a distinct shift in the performance of the two asset classes.  The first chart below compares high yield spreads (left axis) per the Merrill Lynch High Yield Master Index to the price of crude oil on an inverted basis (right axis).  From the start of the year through the end of June, the two moved tick for tick with each other, so that when crude oil prices rose, spreads narrowed and vice versa.  Since oil made a short term peak and fell 20%, however, high yield hung in there as spreads remained right near their YTD lows.

Even within the energy sector of the high-yield market, spreads have become increasingly uncorrelated to oil prices.  The chart below is the same as above except that rather than looking at the entire high yield market, we only show spreads in the high yield energy sector.  Here we see nearly the same trend as the overall high yield market.  Oil prices have declined (rising black line in chart), but spreads have remained relatively contained.  One potential explanation for the lack of any major widening in spreads despite the decline in crude oil prices is that due to a slew of ratings downgrades, the overall credit profile of the “junk” sector is much better now than it was earlier this year as previously investment grade companies have now moved down to the ‘junk’ part of the sector.  Whatever the reason, the high-yield market remains much less concerned about declining oil prices now than it did earlier this year.

On the subject of high yield, the fact that spreads have held up in the last several weeks has helped to maintain what is turning out to be a very good year for the high yield market.  The chart below shows the performance of the overall high-yield market and energy in particular.  YTD, high yield credit is up 12.7% after being down as much as 5% in February.  High Yield Energy, however, has been the big star.  After being down 19% on the year in February, the sector has erased the loss and turned it into a gain of 24.3%.  And you thought equities saw a big turnaround in 2016!

Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week.  The links are mostly market related, but there are some other interesting subjects covered as well.  We hope you enjoy the food for thought as a supplement to the research we provide you during the week.

A Place To Stay

America’s New Small Towns: Housing Developments That Recreate Village Life by Amy Gameran (WSJ)

Newly built, exclusive, and intimate small towns are being marketed as a modern version of the bucolic America of yester-year. [Link; paywall]

Forget the athletes’ village, we’re staying on a CRUISE LINER! Team USA basketball millionaires reject shared bedrooms for luxury life with spa, shops… and 7ft beds by Shkehar Bhatia and Louse Cheer (Daily Mail)

Forgive the hyperbolic title, but this story is frankly hilarious. When NBA stars got worried about the quality of accommodations for the Olympic Games in Rio, Cisco stepped in to rent them floating quarters. [Link]

I lived like a hermit for a week — and it revealed a scary reality about life in 2016 by Kate Taylor (Business Insider)

How to live at home with all the goods and services you need….without ever leaving your apartment. We’re skeptical that most could afford the price tag, but a fun look at the on-demand economy. [Link]

Extremism

How a Secretive Branch of ISIS Built a Global Network of Killers by Rukmini Callimachi (NYT)

A trip inside the effort by ISIS to penetrate European society and attack civilians. [Link; soft paywall]

New Economic Angles

Buddhist Economics: How to Start Prioritizing People Over Products and Creativity Over Consumption by Maria Popova (Brain Pickings)

A critical look at some of the basic tenants which underpin both our economic model and the public policy which underpins it. [Link]

A lesson from history: the safety of government debt depends on private sector liquidity by Carolyn Sissoko (Synthetic Assets)

A turn through the looking glass around the discussion of a “safe asset shortage”; the problem may be a lack of private sector supply rather than a lack of government-issued supply. [Link]

Education, Participation, And The Revival Of US Economic Growth by Dale W. Jorgenson, Mun S. Ho, and Jon D. Samuels (NBER Working Papers)

In an interesting twist, the authors forecast a significant rise in US economic growth thanks to a run up in the hours worked by Americans that had previously left the labor force. [Link; 56 page PDF]

Failed Systems

The Soviet Union: Achieving full employment by Artir (Nintil)

While the Soviet system was a terrible one in too many respects to list here, it did have the odd artifact of extremely high employment rates. This is a fascinating historical quirk. [Link]

Through the Venezuelan Looking Glass by Ricardo Hausmann (Project Syndicate)

A summary of the disaster that is Venezuelan public policy, from a former member of the Venezuelan government. [Link]

Mouths Only

Restaurant Recession? Pizza Party! by Shelly Banjo (Bloomberg)

Amidst disappointing earnings, Domino’s Pizza stands out as a star performer. [Link]

Flossing is a complete waste of time (AP/NY Post)

We’re glad to hear that our oft-neglected flossing efforts are not, in fact, going to be a problem. [Link]

Weird Science

Archaeologists have uncovered a massive palace at the legendary birthplace of King Arthur by Bec Crew (Science Alert)

A dig at the location that was the mythical seat of King Arthur has revealed a massive palace; no word on whether any swords have been found in stone or at the bottom of a lake yet. [Link]

Humpback whales around the globe are mysteriously rescuing animals from orcas by Bryan Nelson (Mother Nature Network)

In an apparent act of inter-species trolling, humpback whales are intervening to protect the prey of their more vicious cousins, orcas. [Link]

The Folly of Youth

How Helicopter Parenting Can Cause Binge Drinking by Caitlin Flanagan (The Atlantic)

A deep dive into the unintended consequences of aggressive, outcome-based parenting techniques and some of the havoc that they rain on teenagers. [Link]

‘Massive’ breach exposes hundreds of questions for upcoming SAT exams by Renee Dudley (Reuters)

Who watches the testers? Hundred of SAT questions were easily obtainable by Reuters, indicating that it’s imminently possible that the materials had been leaked elsewhere. [Link]

China

A Guide To Catching Up On China’s Politics And Military by Peter Mattis (War On The Rocks)

A comprehensive, link-stuffed rundown on the institutional happenings inside China.We highly recommend this background given the evolution of stresses in the South China Sea. [Link]

Investing

When is a “Value” Company not a Value? by Christopher Meredith (Investing Resarch)

An overview of why changes in management behavior may have made one of the most important valuation metrics investors use much less relevant. [Link]

Debt

Which Households Have Negative Wealth? by Olivier Armantier, Luis Armona, Giacomo De Giorgi, and Wilbert van der Klaauw (NY Fed Liberty Street Economics)

An excellent analysis of what drives negative net wealth: student loans. While negative net wealth households tend to have low assets, by far the biggest factor in their total position is variation in student loan balances. [Link].

Media Business

Snapchat Used to Spook Advertisers. Not Anymore. by Katie Benner and Michael J. de la Merced (NYT)

New ad formats, a huge user base, and a hot demographic have all made Snapchat much more attractive to advertisers over the last year. [Link; soft paywall]