S&P 500 Drops 90 points

Why?

Trade Hopes dashed – It turned out a deal with China wasn’t quite yet a done deal. Politicians should be reminded that markets move much faster than trade negotiations or Congress.

Yield Curve approaching inversion – Five-year drops below two-year, but maybe we should wait for the ten year to drop too.

Rising Interest rates – based on Fed fund futures, the chance that the Fed raises interest rates on December 19th is 80%

Brexit – British Prime Minister May lost a round in Parliament while the European Union might let Britain withdraw its Article 50 request to leave – if the British were to change their minds.

The US Economy – GDP growth is good, unemployment is low but home sales are slowing and business capital spending looks soft.  Will the stock market spoil consumers’ optimism?

VIX above 20 – just about normal. Since the end of 2000, the average is 19.5

While anything, and everything, on this list could explain why the market dropped over 3% today, the main reason was probably that it started to sink and everyone followed along.

The posts on this blog are opinions, not advice. Please read our disclaimers.

Leave a Comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>