The calendar turns to December next week, and as I write, the TSX in Canada, US markets, and bonds across the board, are all in the red for 2018.
It’s rare both the equity markets AND bond markets are down in correlation, but here we are. Despite their “safe haven” reputations, treasury bonds and even gold fell. Commodities in general have been in the dumps for almost a decade. Energy prices had a huge rally off the mid-$20’s bottom to $76 or so, but October was a tough month and WTI crude now sits in the low $50’s. Canadian energy stocks did not participate in the upside, but certainly got punished (again) as prices fell.
Solid economic growth and tighter Federal Reserve policy have put downward pressure on all assets.
How much so?
All told, of the 70 asset classes tracked by Deutsche , 90% of those are posting negative returns for the year, the highest since 1901. That’s right, 117 years!
Here is the chart:
Except for cash (earning almost zero), there really has not been anywhere to hide.
By some measures, global stocks and bonds are both on track to finish the year in the red for the first time in over 25 years. It’s a rare occurrence folks, but here we are.
Even cryptocurrency Bitcoin which a year ago stood at just under $20,000, is at $3500 as I write (down over 80%).
I’m not sure we are at a near term lows just yet, but I think we are real close. I think we still need that final “capitulation” day or an intraday reversal day, but either way I think (hope) we get a yearend rally. We may also see some downward pressure from tax loss selling as well.
But we are close…
Stay tuned,
Vito Finucci, B.COMM, CIM, FCSI
Vice President and Director, Portfolio Manager
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