Macro

The UK Treasury's sale of its remaining stake in British Petroleum, priced just before Black Monday, left underwriters holding shares worth far less than the offer price. Some underwriting banks pressed the government for relief, and BP's share price languished well below the issue price for months. The episode became a cautionary tale about launching large privatizations into volatile markets.

The energy sector is under pressure this month, weighed down by the British government’s poorly timed sale of BP shares amid a broader market crash, which amplified investor caution and eroded confidence in near-term equity performance. While macro volatility provided a challenging backdrop, the direct drag on sentiment stemmed from the execution risk around state-linked divestments in major oil names during turbulent conditions. This has reinforced a defensive posture in the sector, contributing to the bearish -0.20 read.

Black Monday crash; overbuilding glut becomes apparent

U.S. President Ronald Reagan and Soviet leader Mikhail Gorbachev signed the landmark INF Treaty, committing to eliminate all intermediate-range nuclear missiles, marking the first time an entire class of nuclear weapons was scrapped. The pact, requiring reciprocal on-site inspections, could reduce over 2,000 missiles and shift Cold War dynamics, with potential implications for defense spending and geopolitical stability as Senate ratification looms.

Real budgets were now declining under deficit constraints, and the December INF Treaty, the first arms-reduction pact, signaled a thaw and program cuts ahead.

Citicorp announced it would set aside $3 billion against its portfolio of loans to Latin American countries, effectively acknowledging the debt would not be repaid at face value. Other major money-center banks followed with similar reserves in the following weeks. The move marked a turning point in banks' public reckoning with the 1980s Latin American debt crisis.

The finance sector is sharply negative this month, weighed down by widespread layoffs on Wall Street as trading revenues plummet amid a post-crash lull in market activity. Sentiment is further eroded by the high-profile prison sentence of Ivan Boesky for insider trading, which intensifies reputational damage and regulatory scrutiny across the industry.

A strong start faded as the Fed's September hike to 6% pressured our rate-sensitive shares, and October's Black Monday crash dragged us down with the broad market despite our defensive profile.

Black Monday (-22.6%) craters all valuations including tech

A boom (Dow past 2,000) and hot media M&A carried the year until Black Monday spooked advertisers about 1988, though economic fundamentals held. Positive then sharply lower.

Gold prices climbed in the days following the crash as investors rotated out of equities and into traditional safe-haven assets. The move reflected broader anxiety about financial-system stability and the dollar's weakness. Precious metals saw increased trading volume through the rest of 1987.

A weakening dollar lifted commodity prices and copper through the year, and gold rallied hard as a safe haven after October's Black Monday crash, boosting a hard-asset owner's revenue.

Cheap energy and a weak dollar powered a strong export-led year for factories; Black Monday dented confidence in October but the real economy and order books kept growing.

Retail chains reported weaker-than-expected holiday sales as consumers pulled back following October's stock market crash. Economists debated whether the crash's wealth-effect hit to consumer spending would tip the economy into recession. Retail stocks underperformed in the final weeks of 1987 on the soft readings.

A consumer boom (Dow 2,000, cheap gas) ran strong through September, then Black Monday's crash gutted confidence and produced soft holiday retail sales into December.

The FDA approved Genentech's genetically engineered drug tPA for dissolving heart attack-causing clots, marking a major milestone for biotechnology. The drug, expected to generate up to $1 billion annually, improves heart function when administered quickly but carries bleeding risks. Approval boosts Genentech's market position and could drive significant revenue growth.

Healthcare sentiment is positive this month, driven primarily by the FDA’s approval of Genentech’s genetically engineered TPA, a significant advancement in clot-dissolving therapeutics that signals continued innovation momentum in biotech. While broader market conditions are stable, the sector’s gains are rooted in this regulatory greenlight, which reinforces confidence in R&D pipelines and near-term commercial potential for engineered biologics.