Infighting at OPEC last week sparked Saudi Arabia to launch an all-out price war, pummeling crude oil prices on Monday. Global demand is a major concern, and now with potentially too much supply, the price is collapsing. As the LPL strategists discuss, this is a potential first domino to fall, as energy is a large part of the high-yield bond market. The credit markets have historically been a good signal of potential economic stress, suggesting that lower energy prices could significantly impact high-yield, which could lead to more economic disruption.
March 9, 2020 marks the 11-year anniversary of the beginning of the current bull market. Will it make it to 12 years? As the LPL strategists discuss, a strong US consumer and cheaper valuations are two reasons to think it will. The major negatives are the coronavirus impact on the global economy, along with the fact that bull markets can’t continue forever. Could this one simply tire out?
Although the near-term global economic outlook has worsened, it is worth noting that copper has held up quite well recently. This industrial metal is quite economically sensitive and could be a potential positive sign. Also, China’s stock market has quietly started to outperform globally. As the LPL strategists note, we are seeing a historic washout of stocks here, so.any good news could spark a big rally.
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