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Five Years After ZIRP Began, Here Are The Biggest Winners In The Weakest Economic Recovery On Record

Tyler Durden's picture


As Deutsche Bank kindly reminds us today, on Monday it will be exactly 5 years since the Fed made the historic move to drive interest rates to zero (well, 0-0.25%) where they have remained ever since. In the same announcement the Fed reaffirmed its commitment to purchase large quantities of agency debt and mortgage-backed securities, a policy that after numerous changes also continues to this day.

The chart below shows the total returns of different global assets over this "unique five-year period" of ZIRP. It’s fair to say that the Fed have created a marvellous environment for virtually all assets even if this remains one of the weakest economic recoveries on record in the US and through virtually all of the DM world.

Deutsche Bank adds:

Only Greek equities (-24%) in our sample have seen negative returns. The standout asset class over the past 5 years has been high-yield corporate bonds, with total returns in Europe of 151% and in the US of 142%. We did a back of the envelope calculation to work out where European HY yields would have to go to see returns of 150% over the next 5 years. The answer was around -47% – although we’d warn you that the calculation did break our computer and it is very dependent on the path of yields. Anyway, it’s not going to happen so no need to get bogged down in the calculations. DM and EM equity has also performed strongly with the US leading the way. The S&P 500 has returned 120% compared to the MSCI EM return of 103% (albeit increasingly under-performing DM over the last couple of years). European equities have lagged (but are catching back up) given the sovereign crisis. Core markets have still seen strong returns though with the FTSE and the DAX both up more than 90% whilst most peripheral markets have still seen positive returns with Spain’s IBEX (+37%) and Italy’s MIB (+12%) higher. Nevertheless the peripherals have under-performed with Greek equities still negative as discussed at the top. Commodities have also performed well over the 5-year period but with most of the returns front-loaded in the first half of the period. Overall copper (+145%) is leading the way with gold something of a middling performer up +47% after a fairly sharp decline from the peak.


Within the DM fixed income universe, HY has been followed (in order of performance) by Fin Sub Debt (around +70%), IG and Fin Sen Corporate Debt (+50%) and finally government bonds (Gilts +34%, Bunds +23% and Treasuries +12%).

DB's conclusion: "When you see the scale of returns seen in these assets it’s hard to imagine that withdrawing QE or ZIRP will be particularly easy for assets." Which is perhaps why withdrawing QE or ZIRP will never happen voluntarily.


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Fri, 12/13/2013 - 09:00 | Link to Comment TheFreeLance
TheFreeLance's picture

"QE or ZIRP" now.  Nah, the Fed is not in a box.

Fri, 12/13/2013 - 09:06 | Link to Comment TeamDepends
TeamDepends's picture

We're all in that proverbial Cessna now...

Fri, 12/13/2013 - 09:13 | Link to Comment negative rates
negative rates's picture

Jack didn't think so either, until we made a toy out of him. Jack and Jill went up the hill, each with a buck and a quarter, Jill came back with two and a half, you think they went for water??

Fri, 12/13/2013 - 09:05 | Link to Comment gyue
gyue's picture


Fri, 12/13/2013 - 09:14 | Link to Comment GetZeeGold
GetZeeGold's picture



Kyle Bass hoards nickels.....I couldn't afford I just hoarded pennies. So far so good.


I had to get a forklift though.....cause that crap is really heavy.

Fri, 12/13/2013 - 10:33 | Link to Comment Oldwood
Oldwood's picture

Get an electric forklift and you can hord both copper and lead! You would be amazed at what a forklift battery costs.

Fri, 12/13/2013 - 10:35 | Link to Comment negative rates
negative rates's picture

Or we could just use your back, if you havn't got that mule anymore.

Fri, 12/13/2013 - 10:35 | Link to Comment negative rates
negative rates's picture

Next go round I would save the nickles, guy found a way to produce cold fusion steam w/ powdered nickle and natural gas. It went against big business so was declaired illegal and so they moved production of the machine overseas. They won't be so lucky next time.

Fri, 12/13/2013 - 11:00 | Link to Comment nickels
nickels's picture   Crazy.  Til it's not----

Fri, 12/13/2013 - 12:14 | Link to Comment Crash Overide
Crash Overide's picture

Pre 1985 pennies? That's where the real copper is at...

Fri, 12/13/2013 - 14:16 | Link to Comment Sonic the porcupine
Sonic the porcupine's picture

Not exactly true.

1909 - 1981 pennies are 95% copper, 5% zinc.

Some of the 1982 pennies are 95% copper/5% zinc, but some some are 2.5% copper 97.5% zinc. So if it is a 1982 penny, the only way to know for sure is to weigh it. If its around 3.11 grams, it's 95% copper, if it's around 2.5 grams, it's 97.5% zinc.

All 1983, 1984, and 1985 pennies, and continuing on today, are 97.5% zinc 2.5% copper.

Fri, 12/13/2013 - 14:18 | Link to Comment Sonic the porcupine
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Fri, 12/13/2013 - 09:06 | Link to Comment youngman
youngman's picture

It show you how a Fed policy can warp the markets..

Fri, 12/13/2013 - 09:09 | Link to Comment HFBondsTrader
HFBondsTrader's picture

so. high yield corporates, eh?

Fri, 12/13/2013 - 09:09 | Link to Comment Ban KKiller
Ban KKiller's picture

The FED buying ALL the RMBS? What could go wrong? We need them, the FED, as the landlord of the US....let's make it official. 

Fri, 12/13/2013 - 09:10 | Link to Comment Smegley Wanxalot
Smegley Wanxalot's picture

it's like a QEBT card without a limit.

Fri, 12/13/2013 - 09:21 | Link to Comment Ghordius
Ghordius's picture

small correction: every fiat currency is like a credit card with unknown limit

Fri, 12/13/2013 - 09:26 | Link to Comment tabasco71
tabasco71's picture

No bitcoin?

Fri, 12/13/2013 - 09:30 | Link to Comment TeamDepends
TeamDepends's picture

Dude, don't give 'em a....  too late.

Fri, 12/13/2013 - 12:17 | Link to Comment tabasco71
tabasco71's picture

They cost me £50 a piece...

Fri, 12/13/2013 - 09:30 | Link to Comment Dr. Engali
Dr. Engali's picture

Where is lead in that list? More specifically full metal jacket lead?

Fri, 12/13/2013 - 11:01 | Link to Comment Svendblaaskaeg
Svendblaaskaeg's picture

"Where is lead in that list? More specifically full metal jacket lead?"

So invest in copper AND lead?, You got a hollow point there me think

Fri, 12/13/2013 - 09:31 | Link to Comment NeedleDickTheBu...
NeedleDickTheBugFucker's picture

Disappointed that my long Greek stocks / short EU HY pair trade is down 160%.

Fri, 12/13/2013 - 09:33 | Link to Comment semperfi
semperfi's picture

guess I should go to the bank and cash out my account all in pennies !

Fri, 12/13/2013 - 11:07 | Link to Comment Umh
Umh's picture

They are going to go nuts when you stipulate old copper pennies.

Fri, 12/13/2013 - 14:22 | Link to Comment Sonic the porcupine
Sonic the porcupine's picture

That could be a good way to double your money, if it weren't illegal to melt down pennies, and if you had a way to transport 3.11 grams x the amount of money you have in cents. That could get heavy real quick. At current copper prices, $7.29 in face value copper pennies weighs around 5 pounds. Which means $1000 paid in face value copper pennies would be around 685 pounds.

Fri, 12/13/2013 - 09:43 | Link to Comment deerhunter
deerhunter's picture

Dr. Engali,  Last ore to lead smelter in the country due to close end of this month due to EPA requirements for scrubbing air borne by products.  Cost of over 100 million to comply causing 80 plus year old company to close.  Seems we may be buying lead from China in exchange for our strong dollar very soon.  Looking into casting my own for my muzzle loader,  never tried it but what the heck.  I think wheel weights are still made of lead.  A lot of fishing sinkers are no longer lead so you need to use three of them or one three times as big for same effect.  Oh well,,   

Fri, 12/13/2013 - 09:59 | Link to Comment Arnold
Fri, 12/13/2013 - 10:00 | Link to Comment Oldwood
Oldwood's picture

Thats why I believe in a diversified portfolio including all calibers of ammo. The next step may be silver ammo as a crossover investment.

Fri, 12/13/2013 - 09:45 | Link to Comment Bobbyrib
Bobbyrib's picture

I would like a stock market bull to explain to me how stocks can be correctly evaluated when the Fed is adding $85B per month to the economy. Most of that money seems to find its way into the markets.

Fri, 12/13/2013 - 10:11 | Link to Comment Oldwood
Oldwood's picture

The correct valuation is based on what the customer is willing to pay. Most of our economy for the last hundred years or so has been based on valuing things of little value. How is it a baseball player can make more than a brain surgeon or engineer? The entire market is irrational and those at the top have visualized this more accurately than most. Anyone who would buy a scrap of paper based on some concept of "value" must be delusional, yet it only grows in scope. The problem with going down the path of a world of delusion is that the only course available is more delusion. Once people have met their most basic needs, it becomes necessary to invent and market new "needs" and God knows we all need MOAR!!

Fri, 12/13/2013 - 10:37 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Please, what "customer"?  LMFAO!!  Do robots count?

Fri, 12/13/2013 - 11:00 | Link to Comment Oldwood
Oldwood's picture

The robots may be the agents but they are still purchasing for humans, the real "customer". If the customer did not want to buy, these algos would be shut off in a NY second.

Fri, 12/13/2013 - 09:46 | Link to Comment eddiebe
eddiebe's picture

I guess the jews have a hard-on for the Greeks.

Fri, 12/13/2013 - 10:11 | Link to Comment DaddyO
DaddyO's picture

Paybacks are hell...


Fri, 12/13/2013 - 09:50 | Link to Comment RaceToTheBottom
RaceToTheBottom's picture

Interesting, the only things in the upper third that are not stock indexes of some kind are Silver and Copper.

Indexes are holding places for printed money.  And Silver has been Monkey bashed by trained assassins

Fri, 12/13/2013 - 10:03 | Link to Comment put_peter
put_peter's picture

US and EU HY ~ SP500 . Make the connection.

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