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The Best And Worst Performing Assets In May

Tyler Durden's picture




 

If April was supposed to be the best month of the year only to leave everyone scarred, bruised and battered, another confirmation that in the Fed's New Normal all the folksy old aphorisms no longer work came with the last trading day in May when we learned that the old adage of "sell in May and go away" has not yet paid off with broad gains for most asset classes in the past month. Equities, Rates, Credit and EM were all generally stronger. Commodities delivered the key underperformance largely led by a sell-off in softs and precious metals.

And while the best performer in May was by far the Russian stock market (which may have crushed Jay Carney's hopes for a macro hedge fund career in his post-White House life), the highlight has certainly been the global rally in DM rates. Indeed the global rally saw nearly all (except for Denmark, Iceland and Greece) the 10-year yields of developed government bond markets finish the month lower.

 

Other observations on the past month's performance from Deutsche:

The strong performance in US rates has definitely provided a boost to EM and spread products across the world. This has trumped good or bad data/fundamentals as the driver of assets in the last few weeks. Having said that, a strong election outcome in India and some emergence of stability in the Russia/Ukraine stand-off were also helpful for EM sentiment. EM bonds were up nearly 2.5% in May bringing their YTD gains to 5%.

 

Away from EM fixed income, DM spread products also did well with positive total returns seen across IG and HY indices on both sides of the Atlantic. Given the performance in rates, IG has generally outperformed HY but much of this is due to the longer duration of IG indices. It’s worth noting that European and US IG/HY credit benchmarks have yet to have a negative month so far this year.

 

Turning to equities, the MSCI EM equity index added 3.5% in May. The ongoing market chatter around Chinese stimulus has also helped sentiment in the Hang Seng (+5.4%), which posted its best gains in 8 months. Staying in the region, Japan’s Nikkei (+2.3% in May) also enjoyed its best month this year although the index is still down 9.4% YTD. Away from Asian equities, the S&P 500, the DAX, and the Stoxx600 all recorded their best performance since February although overall European markets (especially the peripherals) are still outperforming their American counterparts so far this year.

 

Soft commodities were the worst performers in May largely driven by an improving supply outlook for grains. Wheat (-12%) posted its worst monthly drop since 2011 as better rainfall across the Great Plains in the US has apparently improved crop conditions. Away from softs, WTI Oil (+3.0%) and Copper (+3.1%) have been doing better though with the latter posting its best monthly performance this year on talks of Chinese stimulus. Let’s see if we see further momentum on the back of the better-than-expected Chinese manufacturing PMI print that was released over the weekend!

Looking at returns YTD:

YTD gains (including dividends) for the Stoxx600 and the S&P 500 are 7% and 5% respectively. These performances are being overshadowed by gains in Portugal, Ireland, Italy and Spain which are up by +13%, +9%, +16% and +11%, respectively this year.  Overall it has been a pretty good ride for Fixed Income so far this year, across both rates and credit, with total returns in DM credit ranging between as low as 3.3% (USD Fin Senior) to as high as +7.9% (Spanish bonds).

And visually:

 

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Mon, 06/02/2014 - 08:12 | 4816349 meghaljani
meghaljani's picture

The best performing asset in the May is Bitcoin. It's up 60%. 

Mon, 06/02/2014 - 08:20 | 4816369 tmosley
tmosley's picture

Well I'll do you one better.  Darkcoin, a new coin featuring anonymous transactions and other new features (masternodes for more difficult network attacks and better system maintenence), is up 6300%.

Those who missed the train with bitcoin, and those who objected to transactions being recorded and public in the blockchain, should give it a look.  It will likely take over the number two spot from litecoin within a few months.  Might even surpass bitcoin before too long, due to its superior features.

Mon, 06/02/2014 - 12:26 | 4817086 meghaljani
meghaljani's picture

I invested in DRK and did well. 

Mon, 06/02/2014 - 09:01 | 4816460 Al Capowned
Al Capowned's picture

SHUSSS we cant mention Bitcoin because if people start using it, GOOD  things might actually happen in the world, we cant have that.

We should continue pretending it does not exist so we can work on tweaking the old monetary systems that have brought peace and stability over the last 100 years

Mon, 06/02/2014 - 09:12 | 4816489 sessinpo
sessinpo's picture

 Al Capowned   SHUSSS we cant mention Bitcoin because if people start using it, GOOD  things might actually happen in the world, we cant have that.

We should continue pretending it does not exist so we can work on tweaking the old monetary systems that have brought peace and stability over the last 100 years

----

SHUSSS we cant mention Tulips because if people start using it, GOOD  things might actually happen in the world, we cant have that.

We should continue pretending it does not exist so we can work on tweaking the old monetary systems that have brought peace and stability over the last 100 years

Mon, 06/02/2014 - 09:51 | 4816569 tmosley
tmosley's picture

Tulips aren't a currency, and their numbers can increase exponentially.  Bitcoin has a set supply.

Why do you defend the dollar so hard?  You do know that crypto doesn't supplant gold, right?

Mon, 06/02/2014 - 09:13 | 4816494 sessinpo
sessinpo's picture

meghaljani    The best performing asset in the May is Bitcoin. It's up 60%.

---

So it is an asset, not a currency?

Mon, 06/02/2014 - 09:52 | 4816571 tmosley
tmosley's picture

Currencies are a subset of assets, newfriend.

Mon, 06/02/2014 - 08:17 | 4816356 orangegeek
orangegeek's picture

Commodities rolling over.  Isn't that interesting?

 

Most commodities topped in March.

 

Energy was no exception - magically WTI oil failed to go past March highs.

 

Print and pump all you want Yellen - consumers aren't buying it - literally

Mon, 06/02/2014 - 08:19 | 4816365 buzzsaw99
buzzsaw99's picture

wheat corn gold and silver, all the stuff ZHers have been positively orgasmic about for years. how funny.

Mon, 06/02/2014 - 08:21 | 4816375 greatbeard
greatbeard's picture

>> how funny.

Sick fucker.  Spot on, but sick.

Mon, 06/02/2014 - 08:22 | 4816377 tmosley
tmosley's picture

Price controls work.

Until they don't.

Mon, 06/02/2014 - 09:59 | 4816594 Haole
Haole's picture

How many people want to potentially wait until after they're dead for them not to work?

Gold and silver are dead money, until they're not?  When will that be I wonder..?

Mon, 06/02/2014 - 10:04 | 4816612 tmosley
tmosley's picture

Not long now.  Volker has proposed a new Bretton Woods, which implies a return to the gold exchange standard within five years or so.  This will probably be accompanied by currency controls (meaning bitcoin market cap rises to a half trillion or so) and de facto partioning of the dollar.  How long will THAT system last?  I don't know.  Depends whether or not the people starve and thus start a civil war.

Mon, 06/02/2014 - 08:45 | 4816416 BeetleBailey
BeetleBailey's picture

yeeeeeees....the only things of real fucking value.....how knee slapping guffaw inducing....

SHHHHHHHHHHHHHHHHHHHHH..............

we're still stackin, packin and crackin.

Let the muppets chase the hopium.....settin up to be a good slaughter....

...and it'll come...it always does....

Mon, 06/02/2014 - 09:20 | 4816514 sessinpo
sessinpo's picture

orangegeek      Commodities rolling over.  Isn't that interesting?

 Most commodities topped in March.

 Energy was no exception - magically WTI oil failed to go past March highs.

 Print and pump all you want Yellen - consumers aren't buying it - literally

----

buzzsaw99     wheat corn gold and silver, all the stuff ZHers have been positively orgasmic about for years. how funny.

----

Not surprising or funny. I have been saying for over a year that commodities go down in an deflationary environment, as in The Great Depression. Last year we have winter that killed tons of cattle, drought that killed lots of produce and fruit from CA and now the  diarrhea killing pigs, so we have had inflation in food, so everyone mistakenly think we are in an inflationary period.

As I have said, I will repeat, commdoties go down in deflation. Thus gold will go down but I hold some pms as I think pms will not go as far down relative to other markets (like stocks or real estate for example).

Mon, 06/02/2014 - 08:20 | 4816373 AlZo
AlZo's picture

Exactly, where is BITCOIN ?

Might be time to tell Deutsche bank and Bloomberg that Bitcoin is the best performing asset of all -  4 years in a row now.

But still not in the charts ? AYKM ? 

Mon, 06/02/2014 - 09:25 | 4816521 sessinpo
sessinpo's picture

AlZo     Exactly, where is BITCOIN ?

Might be time to tell Deutsche bank and Bloomberg that Bitcoin is the best performing asset of all -  4 years in a row now.

But still not in the charts ? AYKM ?

---

Two things:

1) Do you really want corrupt banks involved with bitcoin?

2) If you had researched bitcoins design, you know it was created to be deflationary on purpose. This confuses some people because they think deflation means prices go down. But if bitcoin is actually a currency, the currency becomes more valuable until it also implodes on itself just as a inflated currency implodes.

What you want in a currency is one that is stable without the swings from deflation and inflation. That has yet to be found.

Mon, 06/02/2014 - 09:54 | 4816578 tmosley
tmosley's picture

Right, just like golds value implodes on itself under a gold standard.

Why use consistant logic when you can just say things that sound truthy?

Mon, 06/02/2014 - 08:55 | 4816445 asking4it2k
asking4it2k's picture

Gold is being manipulated big time by the FED who tells their "primary dealers" to short paper gold. The FED cannot allow gold prices to climb or else people will get out of stocks and into gold. The FED need the stock market to go higher so it looks what they are doing is working.

Mon, 06/02/2014 - 09:26 | 4816526 chapaev's ghost
chapaev's ghost's picture

Price controls work. Until they don't.

Mon, 06/02/2014 - 09:54 | 4816577 Haole
Haole's picture

I don't know how old you are but they could conceivably work for the rest of our lives...

Mon, 06/02/2014 - 09:55 | 4816582 tmosley
tmosley's picture

I guess we should all just give up then.

Mon, 06/02/2014 - 10:01 | 4816603 Haole
Haole's picture

No.  As you know there are ways to prosper outside of the current dead money, "gold bitchez" mantra.  That was my point.

Mon, 06/02/2014 - 10:06 | 4816619 tmosley
tmosley's picture

I see.  Yes, Crypto is good.  But without gold, it is incomplete.  Savings will be in gold, transactions will be in crypto.  This is Freegold 2.0, now with 100% less institutionalized hyperinflation.

Mon, 06/02/2014 - 11:08 | 4816659 Haole
Haole's picture

Bitcoin does not need gold IMHO but I thank the stars for the former as the world waits for the latter to be freed from corruption.  I'd like to think the structure you describe is soon to be part of our future, maybe we're all too idealistic thinking this can be possible but what is life without dreams...  Edit:  I agree 100% they are perfectly complimentary.  Interestingly enough an exchange in Vancouver not only allows one to fund their account with bullion but also to "cash-out" their BTC into bullion, naturally for a price.  https://www.quadrigacx.com/

Mon, 06/02/2014 - 09:32 | 4816530 SilvertonguedAngel
SilvertonguedAngel's picture

Bitcoin is currently too complicated for mass consumtion, and the masses have never even heard of bitcoin, convincing average folks to 'believe' in bitcoin seems akin to climbing Mt Everest.

Also bitcoin has not been around long enough to have passed the test of time. Bitcoin is still to 'new' for stodgy investors, it is not clear to anyone that Bitcoin has any kind of mainstream future.

But the main problem I see with Bitcoin is the perception of it as a pyramid scheme, having been burned in my youth by one, the sales pitch by the Bitcoin apologists sounds hauntingly familiar....

I'm not actually opposed to Bitcoin, but right now it is a highly speculative 'investment' at best, those are just my observations.

 

 

Mon, 06/02/2014 - 10:00 | 4816600 tmosley
tmosley's picture

If bitcoin is a pyramid scheme, then gold is a pyramid scheme.  And dollars are some sort of multidimensional hyperpyramid-scheme now run by Janet "Gozer" Yellen.

Here is some advice: just give it a try.  Open up a coinbase account and buy like $50 worth.  Donate the money to your favorite charity, or buy something on overstock.  I think you will find that it is simpler than you think and also more convenient.  Money transfers are orders of magnitude cheaper than with Western Union or even bank wires.  About 7 cents last I checked, for any sized transaction.

Mon, 06/02/2014 - 10:42 | 4816730 SilvertonguedAngel
SilvertonguedAngel's picture

You are making my point.

Bitcoin is something that is for people who buy on overstock, people who buy at the dollar store and garage sales, in other words MOST people, are not going to 'upgrade' to Bitcoin, ever. So it will remain a plaything for the technoratti in my eyes.

Mon, 06/02/2014 - 10:59 | 4816568 Haole
Haole's picture

No Bitcoin = DeutscheBank Fail.  No surprise, BTChez

Mon, 06/02/2014 - 20:53 | 4818665 Exponere Mendaces
Exponere Mendaces's picture

These barking seal trolls will be arguing that Bitcoin sucks when it clears Gold parity and beyond. (Made even simpler by the supposedly precious metal not rallying worth a damn.)

What else do you expect from people completely inured to the existing legacy financial system.

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