We have reached the end of an extraordinary year for markets, you can find below some interesting stats which better explain what has happened.

 In 2018 all 17 asset classes provided negative returns, 2019 is the exact opposite, with all beating inflation for the 1st time since 2010.


Relative to other asset classes, equity markets globally had the best performance in 2019. Interestingly, though, for 12 months from Dec 12 of last year, 20yr+ US Treasuries have matched the S&P 500, an example of how defensive assets have done unusually well (true across equity markets and credit).

Another interesting point is that last year’s worst performing asset (China equities -20% in 2018) had this year’s best absolute delta in aggregate performance being up +39% from last year’s low! 

All in all, the S&P (+29%) and Russel 2000 (+24%) are on track to have their best years since 2013, while MSCI World is not far behind (+25%). For only the 2nd time in five years, the S&P has been up 10 of the last 11 weeks with very low vol, a sharp contrast to how markets ended 2018.

Trump’s stock market rally is far outpacing past US presidents. The S&P has returned more than 50% since Trump was elected, more than double the 23% average market return of presidents 3-years into their term.

This year, the S&P realized volatility for November and December has been 6% and 8% respectively, versus 19% and 28% for November and December 2018. On a percentile basis, that’s the 14th and 34th percentiles (2019) compared to the 86th and 100th percentiles (2018)!

With the VIX less than half of what it was a year ago, it also interesting to note that the skew is much steeper (86th %tile now versus 1st %tile at YE 2018), despite growth and political uncertainties.

For the first time in a decade, European equities are poised to post annual gains across every industry group. That’s a complete reversal of the trend in 2018, when all 19 sector gauges in the Stoxx Europe 600 Index fell. 

Because of this performance, the S&P is now trading beyond the 18x forward P/E multiple for the 1st time since January 2018 and we can actually find many similarities to that period in terms of positioning and volatility. 2019 saw the 2nd-largest multiple expansion for global stocks since 1988 (only 2009 saw it larger).


Looking ahead, there is the likelihood that the rally should persist into Q1 (historically strength like this in Q4 spilled into Q1) but we need to be prepared for some challenging trading in 2020 particularly if the year brings modestly higher bond yields, a small fiscal expansion and struggling earnings growth.

Since 1950, the S&P has never returned more in ensuing year after gaining at least 25% in the previous one. However, it only had two negative return (1981 & 1990).