As we end the month and quarter, we remind ourselves that a massive amount of the recent 'strength' in risk markets occurred on just two days - ECB and Fed statements. Reflecting on the post-euphoria 'sell-the-news' or BTFD meme, we look at how various asset classes and securities have performed post-QEternity. Two lessons are clear: Front-Run The Fed's action (every time) and Buy Precious Metals.
Silver and Gold are the big winners from the 9/12 (pre-Bernanke) close - followed closely by the Long Bond. Oil and European stocks have lost notable ground and US equities are practically unchanged - having given up their post-QE3 pop...
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While Treasuries did well, the real winner in bond-land was the MBS market - where current coupon 30Y yields plunged as every dealer warehoused (front-ran) the Fed's indiscriminate buying promise... (MBS -70bps vs -14bps in 10Y) - it seems the front-running of the Fed's action is a winning trade again and again...
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but all the hope was for those valuation multiples to be maintained in equity land... how did sectors do? Not so great - Healthcare remains the clear winner as Staples hold unchanged (and the high-beta QE-sensitive sectors have been sold)
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and those no-lose financials - that surely will benefit from QE3 right? - hhmm, not so much. MS and GS are dismal; BofA and Citi are down in line with the sector's 1.2% loss; with only JPM and WFC holding any gains...
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Charts: Bloomberg