Safe havens? What safe havens?
While stock markets in North America look as though they have found some footing, at least for now, investors will be hard-pressed to find areas of the market that have proven resilient in the face of this recent bout of turbulence.
Gold, upheld by some investors as a hedge against inflation and a solid holding during crises, has fallen harder than stocks. While the S&P 500 was recently down 1.8 per cent, gold was down 2.3 per cent. It fell to $1,394 (U.S.) an ounce, off $35.
Meanwhile, the reaction to the U.S. dollar is mixed. Although the greenback historically has been a good place to hide during tumultuous times (it rocked during the financial crisis), its reputation as a safe haven has taken a beating recently. It failed to budge during the early phases of the Middle East political crisis, which sent crude oil prices skyrocketing. On Tuesday, it rose against the Canadian dollar. However, the U.S. dollar index, which tracks the dollar's move against a basket of currencies, rose only slightly and remains near its lowest point since early November.
In terms of stocks, all 10 subindexes within the S&P 500 and Canada's S&P/TSX composite index were down. And the few winners were hardly typical safety-comes-first names. Netflix Inc. , which sports a high valuation, led the way in the U.S. market.
The only real winner here seems to be U.S. Treasury bonds - scorned by so many investors as a proxy for the U.S. fiscal mess. The yield on the 10-year U.S. Treasury bond was recently at 3.3 per cent, touching its lowest level since mid-December and as bond prices have risen.
David Berman