What we’re tracking on 21 November 2018: Are markets melting down?

It’s a grim morning out there, ladies and gentlemen, as we head back to the trenches after a beautiful midweek holiday. To wit:

• US and European equities cratered yesterday, with American equities erasing their gains for the year as a rout kicked off by tech shares deepened and edged into other sectors. The big five “FAANG” tech stocks have lost a combined USD 1 tn in market cap since the correction began.
• Asian shares are following suit this morning. (You can get the latest snapshot here.)
• Oil plummeted 7.6% on Tuesday, driven in part by Wall Street’s use of futures contracts.Need a primer on what’s going on with oil? Stanley Reed has your back.
• The USD was up more than 0.7% against a basket of six major currencies. With “fears of a slowdown in [global] economic growth growth taking hold,” the greenback is looking like a safe haven, some think.
• Still, Wall Street’s “fear gauge” hasn’t returned to its October peak yet, though the Vix is now at a three-week high.

What’s going on? A growing number of analysts are worried about the global growth outlook, and some are suggesting that the markets are picking up on underlying weaknesses in the US and other developed economies.

A loss of momentum in Western markets is going to create more turbulence for EM: “There should be little doubt that developed economies are losing momentum,” the always-on-point Mohamed El Erian writes for the Financial Times — and “the Brexit saga, Italy’s stand-off with Brussels and the changing politics in Germany” suggest there could be still more downside to come. That’s “only adding to the complexities facing an emerging world already coping with China’s more uncertain outlook. … The world’s emerging economies also face challenges because of the shift from synchronised growth in developed economies last year to a much more mixed trend in 2018.” What does this all mean for investors? Read: Risks rise for investors as developed economies falter.

The bottom line? It may not yet be time to “buy the dip,” the FT suggests (see chart, below).