Tales Grim.

Stocks are falling and so too many commodities. For the oil barons, the fall is precipitous. The fall is now approaching levels to where it is believed most oil companies, drillers and frackers have set their budgets. The oil market will start to feel the pulls and strains of a weak oil price and that probably does not bode well for junk spreads nor probably triple-B spreads. West Texas Intermediate crude is down 33% since its four-year high in September.

So Friday was a grim day. We have to go way back to 1939 to find a worse Thanksgiving week performance. The stock market is now down 10% from its September sugar high.

So what can be said about the stock market? It’s interesting because sentiment is definitely on the move and volumes over the last 30 days are 30% below average.

The global economy is slowing and we have the Trump Administration to thank for that. The impact of tariffs or proposed tariffs have affected demand and is causing the global economy to stall. Unlike the ’30s, the U.S. is not independent of global growth and many of its companies have prospered as a result. For many of Trump’s faithful, however, they do not see it this way and are still steeped in the U.S. mythology stemming from the ’30s.

The German PMI was released on Friday and it was a shocker.  The ECB is expected to remain accommodative despite QE ending next month. Bunds and other bonds rallied on this expectation on Friday. Gilts rallied after May went on the charm offensive and being pragmatic for Britain there is no other deal to be made or can be made in such a short time.

For retailers, the Black Friday sales commenced. The average spend was up 2.1% with the average person spending $407.20. For retailers though, it’s a tough gig trying to compete with Amazon. Their margins are wafer thin and then they have shipping on the sales. The game has changed for retailers.

For investors, however, they now have to grapple with diverging views. Has the Fed tightened too much and slowed the economy or is the new paradigm sluggish growth and weak returns? Valuations do matter. Momentum in the economy is slowing and so too the company results.

Since September, only 37% of stocks have exceeded their long-term moving average. Investors are starting to rotate out of high volatility stocks to defensive sectors with the utility sector benefiting from this rotation. A recent survey by the National Association of Active Investment Managers has equity exposure at 30.5%, the lowest since 2016.

However, as we draw towards year-end, it is stunning to think that most investments are now souring. U.S. stocks are now negative and that’s after above trend growth, tax cuts, record buybacks and strong corporate earnings.

The spread between the worst and best performers is amongst the narrowest since 2008. In other words, all investments have struggled this year. The best performers for the year to date in the U.S. are T Bills, the dollar and for the time being, leveraged loans. There is a silver lining however. The repricing is making many investments attractive.

Market Recap.

Equities: The S&P 500 fell 0.66%. The Dow was down 0.73%. The Vix closed at 21.52. The Stoxx dipped 0.2%

Currencies: The Bloomberg Dollar Index gained 0.3%. The euro fell 0.6%. The yen rose 0.1%.

Bonds: The ten-year closed around at 3.046%. The 2-year closed at 2.816% and the 30-year closed at 3.306%. The ten-year bund closed at 0.339% and the OAT closed at 0.724%. The U.S. curve closed on the day with the following closes 2/10 at 22.8 bp, 2/30 at 48.08 bp and the 10/30 closed at 25.6 bp. The U.S. 5-year closed at 2.873%.  On Friday, there was a trend to flatten the curve.

Commodities: WTI fell 6.3% and tried to smash through the important $50 barrier. Gold fell 0.4%.

Bitcoin is trading around $3,944.

Aussie Market Today.

Selling was the order out of both the U.S. and Europe. The Asian zone will have to reflect on this selling. However, with comments and tweets that contradicted themselves, it is a difficult choice whether to buy or sell. I favour selling because that appears to be the trend. There is nothing even remotely settled on trade with China and a trade deal with China is what is providing the buying impetus.

Bonds were steady to better bid offshore. Favour buying bonds because most risk assets are getting riskier by the day. Aussie Itraxx was out pointing towards credit being slightly weaker on the day.

The Aussie dollar is sliding against a rampant King Dollar.