2014 was a rough year for commodities (and not just for oil).
Over the past month in the MSCI World Index, stocks with the lowest beta (divided up by deciles) are up 3.9%. Meanwhile, stocks with the highest beta are down 3.8%, creating a 7.7% performance gap between the lowest beta stocks and the highest beta stocks over the past month.
Since the ECB announced its open ended QE program we have seen numerous parallels being drawn with Japan’s amped-up QE program announced in April of 2013, but telegraphed in late 2012. One of those parallels is that like Japanese financial stocks, Europe’s financial stocks should experience a sharp rally in the coming months.
The EUR is trading at levels not seen in over a decade, in the wake of the ECB’s big QE announcement today.
Has any government debt market ever had such a negative yield curve as Switzerland? One-year Swiss government bonds are currently ”yielding” -114 basis points. One week ago, one-year bonds were at -38 basis points and one month ago one-year bonds were at -23 basis points. Astonishingly, 10-year Swiss government bonds are ”yielding” -20 basis points.