“Bear Markets Everywhere”: Over Half The World Is Now Down 20% Or More

Monday, December 10, 2018
By Paul Martin

by Tyler Durden
Mon, 12/10/2018

In a dramatic reversal to market sentiment that JPM’s head quant could only ascribe to even more “fake news”, SocGen’s Kit Juckes writes this morning that “a week ago, market sentiment was optimistic after the G20 meetings in Buenos Aires. That’s a reminder not to read TOO much into Monday morning markets!”

Picking up on this, another SocGen strategist, Andrew Lapthorne, writes that “having bounced back strongly post-Powell, equity markets slumped last week as the mood turned decisively bearish. MSCI World dropped 3.7%, leaving it 12.6% down from its late January peak.”

It gets worse: as Lapthorne adds, the DAX, China A, Emerging Markets and a host of other markets are now in bear market territory; must be all the fake news out there that is preventing JPM’s optimistic forecast from materializing. Putting the ongoing carnage in context, stock-wise 52% of MSCI World companies are down by more than 20% from their 52-week high, but only 38% of the market cap.

To make that point, Lapthorne notes the drawdown Basic Materials and Industrials sectors: they have already lost over 20% from their 2-year peak – in previous bear markets this usually bottomed out around 30% (GFC excluded). Meanwhile, in Europe, Basic Materials are down almost 30% and Industrials are off 26%. For a while now equity investors have been concerned about a whole gamut of macro issues; it was just the US equity market ignoring them until now, according to the SocGen strategist.

So strong the previous week, the US reversed those gains with the S&P 500 off 4.6%, Nasdaq down 4.9% and the Russell 2000 losing 5.6%, its sharpest weekly decline since the first week of 2016.

The Rest…HERE

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