Panoramic View Of Price Returns For Key Stock And Bond Asset Categories Over 1-Yr, 3-Mo, 1-Mo And 1-Day

Includes: HYG, SDY, SPY, XLE, XLP, XLU
by: StopAlerts

To the extent that momentum of the recent past carries through to the near future, things don't look so good for stocks, and the bubble in bonds is ominous.

There are many fundamental and macro-economic and technical chart factors that investors are examining in an attempt to divine the future.

One of the inputs is simple recent performance. This post provides a panoramic view of price performance over 1-year, 3-months, 1-month and the last day of last week (June 1) for a wide variety of representative ETFs for key asset categories.

Based on lack of encouraging news over the weekend, the strongly negative futures as of midnight tonight (Sunday), and deep red on the stock screens in Asia, the decline seems set to continue next week.

Recent Price Performance of Key Asset Categories:

Utilities and consumer staples have been the best sectors among US equities. Dividend Aristocrats are ahead of broad market stocks. Low volatility US stocks are doing well, but note that they are heavily biased toward utilities and consumer staples.

Energy, then financials and basic materials are the worst sectors.

Mega-cap and large-cap have outperformed mid-cap and small-cap.

All of the significant country stock indexes are negative, with the US as the least awful when the 1-year, 3-month, 1-month and 1-day data are viewed together versus the other countries.

Russia is at the bottom of the pile for 1 month -- not surprising given their overwhelming reliance on energy exports and the poor performance of energy as a sector.

Spain and Italy are on the bottom of the pile for 1 year, but strongman Germany has done poorly as well.

Indonesia, which has previously been a strong performer, is doing badly as is Brazil.

China, which has been a problem performer for a few years now, and which has a slowing economy and a rising set of negative banking issues, is doing comparatively well.

US Bonds are expensive and US Treasuries are in a bubble, but so far have been the stellar performers that have trimmed the losses in portfolios with a fixed income allocation.

High yield corporate bonds are up in price minimally over 1 year and have been in limited loss mode for the last 3 months. High Yield muni-bonds, on the other hand, are doing well.

Long-term bonds have done the best, and are the most overvalued with the higher risk of major losses if the fear premium goes away and/or interest rates begin to rise.

In all the cases, with the possible exception of high yield, the after-inflation, after-tax return on bonds it negative. People are so frightened that they are willing to sign up for guaranteed real losses, in exchange for principal safety -- which safety is non-existent if they do not intend to hold to maturity, because of the interest rate risk.

Developed market international sovereigns are a mess, for the obvious reasons relating to Europe. The parabolic rise in German bonds has not been able to overcome the declines in price of other countries bonds. Emerging market dollar denominated sovereigns are doing OK over 1 year, but have been giving back return over the past 3 months, and were the worst performers over 1-month and the last day of last week.

Symbols in Table Images:

US Stock Sectors Symbol
Utilities XLU
Consumer Staples XLP
Telecommunications VOX
Healthcare XLV
S&P 500 SPY
Consumer Cyclicals XLY
Basic Materials XLB
Industrials XLI
Technology VGT
Energy XLE
Financials XLF

US Market-Cap & Other Slices Symbol
S&P 500 Low Volatility SPLV
S&P 1500 Dividend Aristocrats SDY
S&P 500 Equal Weight Sectors EQL
S&P 100 Mega-Cap OEF
S&P 500 Large-Cap
S&P 1500 Composite ISI
S&P 600 Small-Cap IJR
S&P 400 Mid-Cap MDY
S&P 500 Equal Weight RSP

Country Symbol
Shanghai Stock Exchange ("China") .SSEC
Bombay Stock Exchange ("India") .BSE
Malaysia EWM
Total US Stocks VTI
Japan EWJ
Turkey TUR
South Africa EZA
Total World Stocks VT
Taiwan EWT
Canada EWC
Hong Kong EWH
Netherlands EWN
Chile ECH
France EWQ
Total World Stocks ex US VEU
Singapore EWS
Mexico EWW
South Korea EWY
Italy EWI
Australia EWA
Sweden EWD
Spain EWP
Germany EWG
Thailand THD
Brazil EWZ
Indonesia IDX
Norway NORW
Russia RSX

Bond Type Symbol
Long Government VGLT
Long-Term Bond BLV
Long-Term Bond VCLT
Intermediate Government VGIT
Intermediate-Term Bond BIV
Aggregate US Bonds BND
High Yield Muni HYD
Muni National Short SUB
Short-Term Bond BSV
Intermediate-Term Bond VCIT
Muni National Long MUB
Short Government VGSH
Intermediate-Term Bond VMBS
Short-Term Bond VCSH
DM non-US LC Intermediate Sovereigns BWX
DM non-US LC Short-Term Sovereign BWZ
High Yield Bond HYG
Emerging Markets Bond EMB

If you are a trader, you are not long in stocks at this time, at least not the broad indexes, and you may be in bonds. If you are a long-term investor, you are sweating bullets over whether this is a bear or a correction, whether we are seeing capitulation or the beginning of a steep and continuing slide, and whether there will be government or central bank action just around the corner that will put things back together for a while.

We tend to lean toward the belief that while governments and central banks are low on ammunition, they are not yet out of bullets -- so we expect only a severe correction, but are preparing for worse with well above target cash allocation, and a bias toward high quality dividend stocks mostly from the US. We do have energy and materials related exposures that are rather painful at the moment, but are not bailing on them.

In our last two articles we explored some arguments and forecasts for the S&P 500 for year-end 2012, and some signs of a bear that may be growling.

Disclosure: QVM has positions in XLU, SPY, XLB, MUB, HYD, and HYG as of the creation date of this article (June 3, 2012).

Disclaimer: is a service of QVM Group LLC, a registered investment advisor. This article provides opinions and information, but does not contain recommendations or personal investment advice to any specific person for any particular purpose. Do your own research or obtain suitable personal advice. You are responsible for your own investment decisions. This article is presented subject to our full disclaimer found on the QVM site available here.