A Year Of "Pain Trades" And Flash Crashes: 2015 Summarized In 10 Bullet Points

There are still a few more weeks left in 2015, but we can already summarize the main themes of a year that many will be happy to put in the history books. So, without furhter ado, here are the 10 bullet points that capture what 2015 meant to financial professionals everywhere, and why it was such a painful year to most.

1. 2015 ends with the market cap of Amazon & Google exceeding that of every single Chinese company in the MSCI China index…
2. …the US stock market a mere 107 trading days away from becoming the 2nd longest bull market of all-time, with equity leadership driven by “growth” (longest duration of outperformance ever) & “quality” (at all-time relative high)…
3. …and $6trn of negatively-yielding government bonds, $17trn of bonds yielding <1%, and the Fed expected to raise the Fed funds rates for the 1st time since 2006.
4. 2015 annualized returns (thus far): dollar 11.9%, cash flat, stocks -0.2%, bonds -3.7%, commodities -25.6%... cash has
   outperformed stocks & bonds for the first time since 1990…
5. …because global GDP & EPS in 2015 were consistently revised lower thanks to weak trends in commodities, China, credit, plus a surprisingly lackluster US consumer...
6. …and yet stocks outperformed bonds, highlighting how tough it is to generate fixed income returns after 6 years of ‘financial
   repression”.
7. 2015 was marred by “pain trades” & flash crashes (e.g. Swiss franc, German bunds, China stocks, high yield bonds, health care…) as era of “excess liquidity” mutated into fear of “Quantitative Failure” & market illiquidity.
8. BofAML’s asset allocation of long dollar, long volatility, long real estate, long stocks over bonds & commodities, DM>EM performed well...but “Great Rotation” trades e.g. long banks, short bonds, disappointed, as Main Street lagged Wall Street.
9. 2015 winners: Russia (stocks 22%, bonds 21%), US dollar (10%), Japanese stocks (10%), biotech (7%), consumer discretionary (7%), EM corporate bonds (4%).
10. 2015 losers: Brazil (stocks -33%, BRL -29%), copper (-27%), oil (-23%), oil stocks (-16%), the 30-year US Treasury (-4%).

In short, 2015 was a year of disappointing growth, historically low rates, deflation, inequality, volatility & lackluster returns, outside of the year’s perfect pair trade of long US dollar, short commodities.

Source: BofA

Comments

[GernBranston]

you forgot the release of the new Star Wars

[The_Juggernaut]

Pain?  If you didn't make money in this market, you're a fucking retard.

[OldPhart]

Did I miss the announcement of the Fed Emergency Meeting?

[MFL8240]

Nope, the anouncement worked, just look at Gold and Silver. 

[bobert727]

All US Banks will be closed Thursday..........

[Francis Marx]

The've build a house of cards...

[Hohum]

Author of this article hasn't heard that growth died around 1970.

[Temporalist]

What was that?!?!  I just saw a herd of purple and pink unicorns fly by shitting skittles in the sky!!!

[PoasterToaster]

It only makes sense.  The fascist state's #1 tool for thought control and suppression, Google, is naturally the most valued entity in the fake stock market.

[coast]

~ gold

~  silver

[coast]

Hey all...above is a poll if u prefer gold or silver....I prefer silver and will explain why later....

[BeaverCream]

Summed up:

The Fed printed money and the government went further into debt.  The .01% acquired vast amounts of the wealth, the 99.9% saw decreasing quality of life.

[jacship]

were all fuked