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Bitcoin and Brazil stand out in 2021's cross-asset scorecard: At the Open - SEEKING ALPHA

NOVEMBER 19, 2021

By: Kim Khan, SA News Editor

Glowing dark background with bitcoin symbol. — peshkov/iStock via Getty Images

BofA Securities breaks down asset performance for the year and also notes that real rates are at levels more historically associated with panics.
In the weekly Flow Show note, Chief Investment Strategist Michael Hartnett and team rank the best and worst places for 2021 returns.
Bitcoin (BTC-USD) leads with a 98.8% return, followed by natural gas (NG1:COM) (NYSEARCA:UNG) with a return of 89.7%. Oil (CL1:COM) (NYSEARCA:USO) is third at 61.5%.
All-countries equity sectors follow, with the MSCI ACWI Energy Index up 33.9% and the ACWI Banks Index gaining 26%. U.S. stocks (NYSEARCA:SPY) (NASDAQ:QQQ) (NYSEARCA:IWM) round out the top six with a gain of 25.7%.
High-yield CCC bonds (NYSEARCA:HYG) returned 10.2% and inflation-protected Treasuries (NYSEARCA:TIP) returned 6%.
"Inflation explains commodities (up 46% for best year since '73) & government bonds (down 8% for worst year since '49), as well as outperformance of energy & banks," Hartnett writes. "Excess liquidity helps explains the ascent of cryptocurrencies (a transformative technology)."
"Dovish central banks & V-shape in EPS explain splendid performance of stocks, particularly US stocks which have outperformed the RoW by most since '97 (19.0pps); note 10-year rolling outperformance of US stocks vs government bonds widest since 1964 (12.2pps)," he adds.
On the other side, the Brazil stocks (NYSEARCA:EWZ) fared the worst, down 18.5%, while China equities (NASDAQ:MCHI) are off 12.2%. LatAm stocks (NYSEARCA:ILF) are down 11.2%.
Overall, government bonds fell 7.9%, while the 30-year Treasury bond (NYSEARCA:TBT) (NASDAQ:TLT) lost 7.1%.
Gold (XAUUSD:CUR) (NYSEARCA:GLD) is down 1.3% for the year.
"China & monetary tightening meant miserable performance of Emerging Markets (LatAm stocks relative to US just hit lowest level since LTCM crisis of 1998)," Hartnett says.
Panic-level rates. Ten-year real interest rates are now at -4.6%.
That's "a level in the past 200 years that has been associated with panics, inflations, wars & depression, and a level today increasingly responsible for froth in crypto, commodities, and US stocks."
In times of low rates, Leuthold Group says that bonds are bad but investors can't get enough of them.