…anything that goes up must come down! As if we did not have enough problems from the Fed & Tariffs, fall of Crude oil is fueling the Markets sell-off with growing speculation of slowing global economy.
All the F-A-A-N-G stocks are firmly in the bear market territory (down 20% or more from their highs). Retails got slammed last week. Industrials are getting no love either. Now the Energy sector is also bleeding with the falling crude prices. With no place to hide and chance of a Santa rally getting bleak by the day, all eyes are on G20 meeting. While not much is expected from G20 either, most important event to be watched will be the Trump/Xi meeting on Friday. Trump keeps screaming that China badly wants a deal but looks like now Trump is the one who badly wants a deal. Asians normally have a thick skin and much higher tolerance for pain as compared to their western counterparts. As the shadow of the Trade war grows larger, global Companies are feeling the heat of rising raw material prices which will eventually be passed on the Customers stoking much feared inflation! This will cause the Fed to continue with its Hawkish tone for 2019 and beyond.
GOP lost the House in the midterms and may lose the Senate as well in 2020 if the Trade War goes on for a long time. While Trump wants to make America great again, he better be aware that we are in a global economy and that in fact is the “crude” reality!