Two months ago we first showed what Deutsche Bank dubbed "a quite fascinating statistic" namely that as of the end of October, 89% of assets that the German bank collects data on for its annual long-term study, had a negative total return year to date in dollar terms.
Fast forward to today, when picking up on the theme of ebbing liquidity tides, in his last Early Morning Reid for 2018, Deutsche Bank's Jim Reid writes that "2018 has been like a rebellious teenager suddenly aware of their own mind, independence, and the world around them after years of being guided and cajoled in everything they do." He also notes that for him "Peak QE moving to QT and the Fed raising rates four times this year has been enough to reverse a significant amount of the liquidity-inspired asset price returns of the pre-tightening era. A bit like Road Runner galloping off the cliff only to suddenly look down."
Reid notes that the chart in question showing the percentage of global assets down on a dollar adjusted basis each year since 1901 was "The most requested chart we've ever been involved in", and as updated below, 2018 continues to the be the worst year on record on this measure with 93% of assets currently down -worse than the years of the Gread Depression - and up from 89% at the end of October.
The record bearish print is made all the more fascinating, considering that just one year ago, 2017, was the 'best' year ever for markets on this measure, when just 1% of assets finished with a negative total return in dollar terms.
Putting these two extreme years in context, since 1901 the average has been that 29% of assets finish a given year with a negative total return, leading Deutsche to exclaim that it's been "An amazing couple of years nonetheless as we swing from one extreme to the other. It's perhaps not a surprise that in this time major DM central banks have moved from peak global QE to widespread QT.".
Picking up on this theme, Morgan Stanley recently also noted that 2018 was a "Historically bad year", adding that "If one is looking for a reason why it's been hard to be a multi-asset investor this year, look no further; there's been no place to hide."
Whether a downturn materialises or not after the end of next year, markets could price it in increasingly as 2019 develops, which would be a problem.
https://www.zerohedge.com/news/2018-12-21/2018-officially-worst-year-record-93-all-assets-down
Fast forward to today, when picking up on the theme of ebbing liquidity tides, in his last Early Morning Reid for 2018, Deutsche Bank's Jim Reid writes that "2018 has been like a rebellious teenager suddenly aware of their own mind, independence, and the world around them after years of being guided and cajoled in everything they do." He also notes that for him "Peak QE moving to QT and the Fed raising rates four times this year has been enough to reverse a significant amount of the liquidity-inspired asset price returns of the pre-tightening era. A bit like Road Runner galloping off the cliff only to suddenly look down."
Reid notes that the chart in question showing the percentage of global assets down on a dollar adjusted basis each year since 1901 was "The most requested chart we've ever been involved in", and as updated below, 2018 continues to the be the worst year on record on this measure with 93% of assets currently down -worse than the years of the Gread Depression - and up from 89% at the end of October.
The record bearish print is made all the more fascinating, considering that just one year ago, 2017, was the 'best' year ever for markets on this measure, when just 1% of assets finished with a negative total return in dollar terms.
Putting these two extreme years in context, since 1901 the average has been that 29% of assets finish a given year with a negative total return, leading Deutsche to exclaim that it's been "An amazing couple of years nonetheless as we swing from one extreme to the other. It's perhaps not a surprise that in this time major DM central banks have moved from peak global QE to widespread QT.".
Picking up on this theme, Morgan Stanley recently also noted that 2018 was a "Historically bad year", adding that "If one is looking for a reason why it's been hard to be a multi-asset investor this year, look no further; there's been no place to hide."
Whether a downturn materialises or not after the end of next year, markets could price it in increasingly as 2019 develops, which would be a problem.
https://www.zerohedge.com/news/2018-12-21/2018-officially-worst-year-record-93-all-assets-down
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