Trade Tantrums & Trump Turmoil Spark Best Quarter For US Stocks In 5 Years

Summing the quarter up nicely…

The World Is Down In 2018…

STOCKS

US stocks are outperforming the world still in 2018 with China worst…

 

US equity markets close the quarter at their most-expensive in history…

 

Best quarter for US stocks in 5 years… (S&P is up 11 of the last 12 quarters)… Dow Transports (green) and Industrials (blue) were best in Q3, Small Caps (red) were worst…

World Stocks (Ex-US) eked out a modest 1.3% gain in Q3 – the first quarterly gain since 2017 – but Chinese stocks fel lfor the 4th quarter in a row…

 

European Stocks were very mixed in Q3 with France’s CAC outperforming and Italy’s FTSEMIB the worst (collapsing in the last few days as budget headlines struck)…

But in September, Italy was best – despite this week’s collapse – and DAX worst…

 

But September was much more mixed in the US…

But Nasdaq closed September red – breaking its 5 month win streak. Small Caps also closed red in Sept, the first down month since February. S&P, however, eked out gains in September for its 6th straight monthly gain in a row…

 

On the week, only Nasdaq closed green (notice the plunge midweek that was caught perfectly at unch)…

 

“Most Shorted” stocks ended lower in September (first monthly drop since Feb) but soared in Q3…

 

US Tech stocks outperformed financials for the 5th quarter in a row, soaring for 7 straight days (relative to financials) into month- and quarter-end…

 

Despite surging rates, banks were battered in September. Only Citi managed to hold on to any gains in September among the big banks with Wells Fargo down almost 10%…

 

FANG Stocks managed to cling to a gain on the quarter – the 7th quarterly gain in a row – and a small loss on the month, but barely…

Tesla stood out in the month and quarter…

Tesla is down 15% today…

Which pushed GM back above TSLA as America’s largest market cap automaker…

US Stocks are in a world of their own…

BONDS

Thanks to a bloodbath in September, bonds ended the quarter notably higher in yield…

 

September saw the biggest 10Y bond yield spike since April…

 

The US yield curve flattened for the 7th month in a row (and 12th of the last 13)…

 

And flattened for the 17th quarter in the last 19…

 

On the week, all but 2Y ended the week lower – especially post-FOMC…

 

HY bonds outperformed IG bonds notably for the 4th month in a row (and 3rd quarter in a row)…

 

FX

The Dollar Index ended Q3 unchanged for all intents and purposes – having traded in a very narrow range basically controlled by the ECB spike in Q2 (narrowest since Q2 2014)…

 

Among the majors, Yen was weakest; cable, aussie, and loonie were strongest (marginally though), however, despite its weighting, it was yuan that warranted most attention… PBOC fixed the Yuan at its weakest since Aug 17th and offshore yuan sits right at critical support from its cycle lows…

 

Emerging Market FX fell for the second quarter in a row led by Argentine Peso, Turkish Lira, Indian Rupee, and Russian Ruble (Mexican Peso was best in Q3)…

Emerging Market FX in September was its best month since January, but was mixed under the surface with Argentine Peso worst (down over 10%) and Turkish Lira best (+7.5%)

Cryptos were mixed in Q3 with Bitcoin and Ripple managing gains and Ethereum crashing 45%…

 

Bitcoin is up on the quarter (first quarterly gain since Q4 2017) but down in September…

 

COMMODITIES

WTI dominated commodity-land in Q3 and silver was slammed (but there was some maniacal bid into the quarter-end)…

 

Gold fell for the second quarter in a row (biggest drop since Q4 2016 and first quarterly close below $1200 since Q4 2016)

 

Silver was ugly too – but bounced off its lowest levels since Jan 2009…back up near its 50DMA…

 

And as Gold and silver drop, specs have plunged to unprecedented positioning…

 

Oil headed for its longest string of quarterly gains in more than a decade as impending supply disruptions threaten to fracture a global market with little margin for error. The current front-month (Nov 18) contract is now up 5 quarters in a row…

 

On the month, Copper and Crude surged (China stimulus hopes?) and Silver spiked into the close to end green…

 

Gold/Silver was crushed on the last day on the month/quarter – the biggest daily drop since Nov 2017…

On the week, Silver and Crude were the best performers…

 

The real PhD in economics – Dr. Lumber – collapsed in Q3 – the biggest drop since 1993! (and September was its worst month since April 2011)

 

Finally, US ‘hard’ economic data fell for the 3rd straight quarter – but stocks don’t care…