GraniteShares ETFs is pleased to announce that its latest fund launch XOUT won the Best New Smart Beta ETF Award from ETF.com! We are thrilled to receive this distinguished industry recognition for XOUT, which flips the investment paradigm by seeking to exclude losers from the portfolio as opposed to trying to pick winners. Since XOUT launch 10/7/19 through 3/31/20, the XOUT Index outperformed the market by 5.1% by using this indexed methodology.
The ‘08 Financial Crisis is often raised as a benchmark for the current market turmoil, but the 1929 crash unleashing the Great Depression may be a more fitting proxy. Join us as we examine how the unprecedented market conditions are impacting gold.
The hurricane cone of market uncertainty radically expanded from where it had stood only moments early at Tuesday 9:59 am, with the emergency cuts raising previous obscure possibilities to the forefront. Examining the fallout provides an empirical illustration of gold’s role in the portfolio during market stress, illuminating not only surprises but outright oddities emanating from the market tumult.
The mathematical reality is that the venerable 60/40 was a sub-optimal investment in 2019—simply adding gold, and in any quantity, would have immediately improved portfolio efficiency. Even during a historic year for bonds, substituting gold for fixed income exposure in 2019, in any amount, automatically constructed a superior 60/40 portfolio. While sacrilegious to the extreme, these insights merely combine the 70 year old lessons of Modern Portfolio Theory with gold’s ability to buffet market volatility.
One of the prime rationales for a gold allocation is introducing an uncorrelated driver of returns to stock and bond exposures, two fundamental building blocks for most standard portfolios. The challenge is, for many investors the search for diversifying assets begins and ends with gold, when there exists an entire ecosystem of precious metals just over the horizon.
An up-and-down week for U.S. stock markets with all major U.S. broad market stock indexes ending lower on the week. U.S stock markets moved higher on Monday despite the Trump administration extending social distancing guidelines through the end of April. The continued increase in reported coronavirus cases and fatalities and the Trump administrations statement that there may be as many 240,000 U.S. coronavirus fatalities combined with a much larger-than-expected increase in jobless claims on Thursday and a worse-than-expected payroll report on Friday pushed U.S. stock markets lower for the week (though President Trump’s announcement on Thursday that Saudi Arabia and Russia would implement large oil production cutbacks helped boost not only the price of oil but also moved U.S. stock markets momentarily higher). At week’s end the S&P 500 Index lost 2.1% to close at 2,488.65, the 10-year U.S. Treasury rate fell 9bps to 0.60% and the U.S. dollar (as measured by the DXY Index) strengthened 2.4%.
Yet another volatile week for bond and stock markets, though this time U.S. stock markets ended the week higher. Monday’s FOMC announcement of unlimited Treasury and mortgage backed securities buybacks along with three new lending programs to support consumer and corporate credit did little to buoy U.S. equity markets with the U.S. Senate’s inability to pass a $2 trillion coronavirus stimulus package Sunday and again on Monday weighing heavily on market sentiment. Reports on Tuesday that the Senate was close to approving the stimulus package reversed market sentiment pushing U.S. stock markets significantly higher despite sharply lower Europe and US PMI composite flash indexes. (The Dow Jones Industrial Average increased over 11%, its largest one-day gain since 1933, and the S&P 500 Index increased over 9%.) U.S stock markets moved sharply higher again on Thursday, despite record high jobless claims, after the Senate finally approved the stimulus package and as a result of the ECB restarting its debt buyback programs. Emerging concerns that central bank action and government stimulus packages may not be sufficient to forestall a recession helped move the S&P 500 Index over 3% lower and the 10-year U.S. Treasury rate down by 17bps to 0.68% on Friday. At week’s end the S&P 500 Index increased 10.3% to 2,541.47, the 10-year U.S. Treasury rate fell 16bps to 0.68% and the U.S. dollar (as measured by the DXY index) weakened by 4.3%.
Another very volatile week for U.S and global stock and bond markets. Despite the U.S. Federal Reserve Bank’s emergency 100bp rate cut on Sunday evening, U.S. and global stock markets fell sharply on Monday with the S&P 500 Index falling 12%. Extremely weak Chinese economic numbers combined with California’s shelter-in-place order on Monday, greatly increased concerns of the effect of the coronavirus on the U.S. and global economy, pushing U.S and global stock markets significantly lower while also causing the 10-year Treasury rate to drop 23bps to 0.73%. Tuesday’s U.S. Federal Reserve announcement of its lending program to support the short-term commercial paper markets to relieve corporate funding stress, helped push the S&P 500 Index up 6% and the U.S. 10-year Treasury Rate to over 1% only to see the S&P 500 Index gains reversed and U.S 10-year Treasury rates move even higher on Wednesday as increased coronavirus concerns resurfaced and investors sold into strength. Thursday’s action by the ECB along with announcements of global fiscal stimulus programs, pushed U.S stock markets off their intraday lows and helped them finish slightly higher for the day. Market sentiment reversed on Friday, however, perhaps spooked by another sharp selloff in crude oil prices with the S&P 500 Index dropping over 5% but this time with 10-year U.S. Treasury rates falling over 30bps to 0.85%. At week’s end the S&P 500 Index was 15% lower at 2,304.92, the 10-year U.S. Treasury rate fell 11bps to 0.85% and the U.S. dollar surged 4.1%.
Rapidly growing fears regarding the strength of global economic growth resulting from government measures to counteract the spread of the coronavirus as well Saudi Arabia’s desire to greatly increase oil output, moved U.S stock markets sharply lower and 10- and 30-year interest rates sharply higher while greatly increasing the volatility of both markets. WTI crude oil prices plunged over 30% intraday on Monday driving U.S. and global stock markets significantly lower (the S&P 500 Index closed down 7.6%) and triggering a trading halt on U.S. exchanges. Though 10-year U.S interest rates fell sharply Monday, they moved higher the rest of the week increasing 26bps on Tuesday alone. U.S. stock markets rallied on Tuesday after Monday’s sharp drop but lost a combined 13% Wednesday and Thursday (falling close to 9% on Thursday) after the WHO officially declared the spread of the coronavirus a pandemic and despite the BOE lowering interest rates 50bps and adopting stimulus measures with the UK government and despite the U.S. Federal Reserve injecting $1.5 trillion into the U.S. funding markets. President Trump’s declaration of a national emergency late Friday afternoon reversed U.S. stock market losses on the day with the S&P 500 Index closing 8.5% higher on Friday. At week’s end the U.S. dollar strengthened 2.9%, 10-year interest rates increased 20bps to just under 1% and the S&P 500 Index lost 8.8% to close at 2,711.02. The VIX Index closed at 57.83, increasing almost 15 percentage points, but well of its recent high of 75.47 on Thursday.
Volatile week for U.S. stock markets. Increasing 4.6% on Monday following Chairman Powell’s Friday statement reassuring the markets that the Fed will act to maintain the expansion, the S&P 500 Index fell 2.8% on Tuesday on increasing coronavirus concerns despite the U.S. Federal reserve bank unexpectedly cutting the Fed Funds target rate by 50bps that same day. Wednesday’s news of an $8 billion emergency spending bill moving through Congress and increased expectations of further rate cuts combined with global central bank accommodation and global fiscal stimulus pushed the S&P 500 Index up 4.2% only to see those gains and more reversed on Thursday and Friday after reports of increased coronavirus cases in California, Seattle and New York. Down almost 10bps through Wednesday, 10-year U.S. Treasury rates fell close to another 30bps through Friday with increasing expectations of more U.S. Federal Reserve rate cuts. At weeks end the 10-year U.S. Treasury rate was 39bps lower at a record low of 0.76%, the S&P 500 Index increased 0.6% to 2,972.37 and the U.S. dollar weakened over 2.2% (as measured by the DXY Index).
U.S. and global stock markets sold off strongly last week on worsening coronavirus concerns. Fears of spreading contagion beyond China, brought to light by increased cases in Italy, Korea and Iran, “community spread” cases in the U.S. and a warning from the CDC about a possible pandemic pushed U.S. stock markets sharply lower and forced the 10-year U.S. Treasury rate to record lows. The S&P 500 Index fell over 3% on Monday and Tuesday and lost almost 4.5% on Thursday. And it was only Fed Chairman Powell’s statement on Friday that the Fed was monitoring the coronavirus’ effect on the economy and would act to maintain the expansion that prevented another 3%-or-more down day on Friday. At week’s end the S&P 500 Index dcreased 11.5% to close at 2,954.22, the 10-year U.S. Treasury rate fell just over 32bps to 1.15% and the U.S. dollar weakened 1.14% (as measured by the DXY index).
Vacillating on coronavirus concerns, U.S. stock markets moved slightly lower through Thursday. A combination of Chinese stimulus measures and statements from China touting a reduced rate in coronavirus infections mostly offset Apple’s lower revenue warning on Tuesday. However, Friday’s much-weaker-than-expected IHS Markit composite output index along with China reporting 800 new coronavirus infections pushed U.S stock markets and the 10-year U.S. Treasury rates to the lows of the week. At week’s end the S&P 500 Index fell 1.3% to 3337.75, the 10-year U.S Treasury rate dropped 11bps to 1.47% and the U.S. dollar strengthened .2% (as measured by the DXY Index).