Macro

After Saudi Arabia abandoned efforts to defend official prices in favor of regaining market share, crude oil began sliding from around $27 a barrel, upending producer economies from Texas to the Persian Gulf.

The price war sent crude from $27 to under $10 by June, an existential collapse that gutted cash flows, bankrupted drillers, and wrecked Texas banks; a late-year OPEC quota deal clawed prices back toward $18, easing the terror only partially.

The London Stock Exchange abolished fixed brokerage commissions and opened membership to outside firms and foreign banks, triggering a wave of consolidation and a surge of American and European capital into the City of London.

The finance sector is reacting positively this month despite growing concerns over FSLIC insolvency, as market participants appear to be pricing in expectations of federal intervention or restructuring to stabilize the thrift industry. The bullish read reflects relief that systemic risks, while evident, have not yet triggered broader banking stress, allowing investors to focus on potential policy containment measures. Sentiment is further supported by the assumption that authorities will act to prevent cascading failures, limiting immediate downside.

The Tax Reform Act of 1986 gutted real estate tax shelters, cutting off the capital that had driven commercial speculation, while the oil crash devastated Texas property; the Fed's August rate cut helped housing but couldn't offset the structural hit.

Weak dollar firms gold and base metals

NASA's Space Shuttle Challenger exploded 73 seconds after liftoff, resulting in the loss of all seven crew members. The disaster halted the U.S. space shuttle program, impacting government space operations and aerospace contractors. Market implications include potential short-term pressure on defense and aerospace stocks tied to NASA contracts.

Defense sector sentiment remains neutral this month despite the tragic Space Shuttle Challenger explosion, as the incident, while drawing intense public and congressional scrutiny, is not directly tied to core defense spending or military operations. The broader defense posture continues to be shaped by ongoing geopolitical tensions and steady procurement pipelines, which have so far offset any negative momentum from the aerospace setback. Market focus remains on conventional and strategic modernization programs, which are proceeding without material disruption.

Fed cut to 5.5%, cheap money lifts leveraged media deals

The explosion and meltdown at the Soviet nuclear plant in Ukraine spread radioactive fallout across Europe, dented uranium and nuclear-utility shares, and intensified safety scrutiny of nuclear power worldwide.

The utilities sector this month remains under pressure, weighed down by heightened safety concerns and regulatory scrutiny following the Chernobyl nuclear disaster, which has cast a shadow over nuclear energy investments globally. Despite this, broader utility demand and grid resilience planning have held steady, preventing deeper declines and anchoring the sector near neutral. The initial market overreaction has so far been offset by consistent performance in non-nuclear utility operations.

Microsoft's initial public offering priced at $21 a share and made founder Bill Gates, then 30, a paper billionaire within a few years as the stock surged, cementing Microsoft's arrival as a dominant software company.

The tech sector this month feels cautiously optimistic, buoyed by strong public market entries from Microsoft, Sun Microsystems, and Oracle Systems, all signaling robust investor appetite for emerging technology firms. While the wave of IPOs—particularly Microsoft and Sun Microsystems going public—provided a clear sentiment lift, the broader rally in tech equities remained measured, with Oracle’s slightly smaller offering tempering outsized momentum. Against a stable macro backdrop, the net positive but modest read reflects solid, not speculative, confidence in the sector’s growth trajectory.

Fed cuts to 5.5%, cheapest since 1978

A strong bull market, collapsing oil prices lowering my input costs, and reviving biotech kept my franchise steadily profitable and re-rating higher through the year.

The roughly $6.2 billion buyout of the food and consumer-products conglomerate was, at the time, the largest leveraged buyout in history, epitomizing the era's booming LBO market fueled by high-yield debt.

The oil crash from $27 to below $10 was a double windfall for consumers, cheaper gas freeing disposable income and slashing input costs, while the LBO boom (Beatrice) valued consumer assets richly.