It is very useful to look at how differing asset classes have performed on a month by month basis as markets are so volatile and it pays to get a pulse on the dying patient, being rolled in and out of ICU. The best asset to be in for February, ta-dah... is cash or better still 3 month T-bills.
What is gratifying is that emerging market bonds have stopped falling. Its good in the sense that the wholesale selling wave have dried up, or rather the de-leveraging process have almost dried up.
TIPs is headed for a big burst as the amount of money running into TIPs has been ridiculous. Selling has continued for bonds of foreign developed markets, primarily in European countries.
Emerging market equities have fallen only half as much as US stocks and foreign developed market equities, a significant sign that investors are finally differentiating the global impact. yes, it has and will hit emerging markets but they should be better equipped to reflate compared to the US and Europe.
Like I said in January, REITs will still be the worst asset to be in, the carnage continues in REITs, dropping by a whopping 21% in February alone.
p/s photo: Anna Tsuchiya
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