Equities: Return Index and Stock-Market Bulls

equities: Through the end of last week, the S&P Total Return Index was down 3.9% for May, while the Bloomberg Barclays Aggregate U.S. Bond Total Return Index was up 0.85% leaving equities with a net 4.72 percentage point underperformance versus bonds, according to Market Watch. That means balanced funds, which keep a set division between equities and bonds, will need to adjust their positioning. Read How stock-market bulls are adjusting to the reality of a messy U.S.-China trade war Here's the setup, according to Vinay Viswanathan and Max Grinacoff, strategists at Macro Risk Advisors Historically, since 1989, when bonds outperformed the stock market by more than 4%, equities rallied by 2.1%, on average, heading into month-end. In other words, they will have to buy equities and/or sell bonds going into Friday, the analysts said. Quantitative analysts Bram Kaplan and Marko Kolanovic of J.P. Morgan, in a note last week, recalled how the stock market's large underperformance in December, which culminated in a Christmas Eve rout that marked the S&P 500's closing low for the fourth-quarter selloff, led to a sharp equity rebound from Christmas to New Year's Eve. Moreover, they noted the spread between equity and bond returns is the fifth most negative of the last five years and that the average month-end rise for equities rises to 2.9% when measured over the last 10 occurrences see table below . Macro Risk Advisors Caption outside of wrapper for normal article images Other analysts have also pointed to the market's tendency to revert to the mean at month-end. (news.financializer.com). As reported in the news.