June's Winners And Losers

Tyler Durden's picture

Think gold and silver were the worst performing financial asset in June? Think again: that dubious distinction falls to the Bovespa, the Shanghai Composite and the Greek stock market index, all of which tumbled more than the precious metal complex did in the past month. Yet what an odd month for hard assets - on one hand WTI, Corn and Brent were the best performing assets, while gold, silver, copper and wheat tumbled. A function of the China's growth renormalization? Or an end to "flight of safety" - we will know quite soon.

One thing is certain: as already noted, the number of gross shorts in gold is now at an all time high. And just as gold was one of the two worst performing assets of the first half (with silver), all that would require the unwind of this move, now that gold and gold miners are the most universally hated assets by the "expert" community, will be a short-covering catalyst, whatever that may be: perhaps some announcement by the PBOC updating the world on its gold holdings following 4 years of crushing silence...

More from DB:

The first half of 2013 will be remembered as a fascinating half with DM equity markets generally outperforming but fixed income markets suffering across the board. June itself was a pretty poor month for markets with virtually all financial assets finishing the month lower. Indeed as we show in Figure 1, all except Oil posted negative returns last month. We also saw EM (debt and equities) correct further as the asset class continues to reprice itself on the back of a higher US government yield, fundamental worries and with it outflows. Relative to EM debt, DM credit has held up relatively well in a rising yield environment even though we saw credit excess returns moderately in the red in June. Oil aside the commodity complex endured a challenging time in June with precious metals falling sharply on the back of Fed taper talks and perhaps concerns with regards to Chinese growth. We’ll explore all this in a little bit more detail below but for those who want to get straight into the numbers, our oft-used
performance charts and tables for June, 1H and YTD are updated in the PDF.

First taking a closer look at equity returns, the Nikkei (-0.6%) and the S&P 500 (-1.3%) were the better performers in June even though both ended the month lower. Whilst it was the worst performance for the S&P 500 in 8 months, the losses pale in comparison with the sell-off in EM equities. Indeed Chinese equities were hit hard in June as a spike in interbank rates raises questions around a potential credit/liquidity tightening and the broader implications for growth. The Shanghai Composite (-12.4%) recorded its biggest monthly drop since August 2009 as the market traded lower in 14 out of the 17 sessions in June (shortened month due to a 3-day Dragon Boat holiday). In other parts of EM, Brazil’s Bovespa index was also down by a comparable 11.3% in June on a TR basis and is now down 22% since the start of the year. Turning to Europe, the Stoxx600, DAX, FTSE were down -5.0%, -4.7%, and -5.2%, respectively. These were big moves but still better than a -15.6% and -10.8% decline in Greece and Italy, respectively. So whilst equities were lower across the board in June, the resilience in DM has been a fairly consistent theme this year with the Nikkei, S&P 500 and Stoxx600 still up about +33%, +14%, and +5% YTD respectively in local currency terms.

Moving on to fixed income, total returns for US Treasuries were -1.4% in June bringing its YTD losses to -2.4% as the Fed showed no desire to soften tapering expectations. As we’ve mentioned a few times, US government debt has tended to set the price of debt globally so a rise in UST yields is also increasing risk premia in other markets with EM debt bearing the brunt of this. EM bonds were down around -3.8% in June after having lost -5% in May, a magnitude that the market hasn’t witnessed since Sept 2011. EM bonds total returns are now around 5% down for the year. The impact was also felt by European core rates markets although to a lesser extent with Bunds and Gilts down -1.0% and -2.4% in June.

The rise in core rates also had a negative impact on DM corporate credit. Whilst moderately negative excess returns also contributed to the negative total returns, DM credit performance has been relatively resilient versus their EM peers. YTD total returns for US IG and HY corporates are currently -3.6% and +1.0%, respectively.

Finally taking a quick look at commodities and currencies, Brent (+2.0%) and WTI (+5.0%) were the key performers in June amid a 2.2% decline in the CRB index. Precious metals suffered the most as QE unwind expectations continued to build. Gold and Silver were down around 11-12% in June, bringing their YTD returns to - 26% and -35%, respectively. In FX, USD was relatively stable against the Sterling and Euro but appreciated over 4% against the Aussie as the latter suffers from a weakening macro backdrop in China.

So a tough June and one that shows how liquidity has been for markets this year. Whether the Fed can hold firm and taper and whether China continues to be more disciplined with its banks will likely be the key stories and asset performance drivers of H2.

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Confundido's picture

Just heard Kerry's answer to a question on NSA's activities. Three things come to mind: 1) With secretaries of state like these...who needs diplomats? 2) I want to smoke what he's smoking 3) The fact that this guy is allowed to be secretary of state is a bad, bad premonition of the decadence that will continue.

tarsubil's picture

State is just a bigwhig club and a front for CIA spying.

new game's picture

Quik lok and loks to be the money handlers, fraudsters, liars are winning.

SOOOOOOOOOOOOOO, the bad guys get rich whilst the good guys HOPE AND ARM UP...

WmMcK's picture

Remember, they also ran him for prez.

Hillary's next, maybe against Jeb.

See a (revolving) pattern?

Free Wary's picture

Wake up, Kerry is no boob. You are naive. He know's exactly what he is doing.. Kerry, Bush 1 and 2, Clinton, Obama, Boehner, Mccain, Schumer. All of them are starters on the same team. Unprecedented epic conspiracy is the only explanation for what is happening.

Sudden Debt's picture



Silveramada's picture

no doubt that PM's will be by the end of the year way more than 19$ silver and 1200$ gold..




A is A's picture

Don't worry! When the Fed's magical monetary fairy dust stops working the new policy will be "NO INVESTOR'S BEHIND LEFT"!!!!

Judge Crater's picture

Kerry has to be a lot better than Susan Rice as Secretary of State, she was a total liar on the Benghazi affair.  And Hillary Clinton was no sterling example of a Secretary of State.  At least Hillary managed to keep her hotel travel expenses secret, unlike VP Joe Biden, who costs the taxpayers half a million dollars or more in hotel costs for the hundreds of rooms he rents for his entourage every time Biden takes a two day trip to Europe. 

CuriousPasserby's picture

They are ALL corrupt fucking morons who need to be tarred and feathered.

We need a million people to march on Washington like in Egypt. But the food stamps and the iPhones keep people happy. Idiots!

ATM's picture

The aren't morons. When you fall into that trap you greatly underestimate them and fail to see the plan they are executing.

They are cunning liars.

tvdog's picture

I've come to the conclusion that Benghazi was a hit. Obama wanted Chris Stevens dead. Given the administration's passionate devotion to secrecy and hatred of whistleblowers, the reason was probably to prevent Stevens from revealing something embarrassing. The ambassador to Libya would know where a lot of bodies were buried (U.S. association with Al Qaeda, the true reasons for the Libyan intervention, arms smuggling and mercenaries passing from Libya to Syria, among other things).

ATM's picture

Stevens was gay. Obama loves gays as a group and individually in the backseat.

Stevens was to be taken hostage to be traded for the blind shiek but a couple of former SEALS showed up unannounced and shot the whole group of Obama's cocksucking Islamists all to hell. That really pisses people off when 60 of your best friends and ass buddies get killed in what was supposed to be a simple snatching of a fairy. 

It was all staged and Obama was in on it. Why else would no help be offered? Anyone in their right mind at the time would have done whatever they could to help save those people but instead were told to stand down and let it play out? They had no reason to fear for the safety of Stevens because they were part of the plan.

The local security was part of it too. They had laid down their weapons and walked away from their posts before anything happened. Those were the weapons the SEALS grabbed as they dashed to help. 

fallst's picture

It is Clear the insiders saw Bernake towel-throw on the infinite QE's, and the start of interest rate climb's, hence the Gold dump months ago...

grid-b-gone's picture

Oil, corn, and fiat - not many winners anywhere last month. Sell in May ...

Cacete de Ouro's picture

Some barometers are more equal than others. Sometime during June...

Kevin Henry: "Mr Benranke, the oil barometer is looking a bit high, and hold on, that corn barometer, something is up there. Do you want me to take a look?"

Ben "No, no, Kelvin, whatever your name is, leave the oil and the corn dogs, no one will notice much until mid July. Look, I told you, and Dudley told you, the only barometer you need to look at is the gold barometer, and in passing the silver one. Got it? And I promised Carney he'd go in on a high."



EL INDIO's picture

I speculate that QE is being used to pump stocks and crash Gold.

This is not the time to sell this the time buy PMs.

Silver is an awesome buy here !

This will reverse, that’s how it works.

new game's picture

Lots of retracing fib style and some pundit suckassing, but when ALL done and said - overfuckingSOLD...

EL INDIO's picture

Nobody knows when the bottom will be but these are definitely awesome prices regardless.

This is accumulation time.

The game is simple, they want us to buy high and sell low that’s how they harvest wealth.

One does not have to play by their rules.

U4 eee aaa's picture

I'm not saying you should jump on this. Trade at your own risk but, this is something to consider:

Junior miners and the 80% rule


We are also coming into gold's strong season which should kick into first gear after July options expiration