Macro

WTI crude touched its lowest level since 2003 as a persistent global supply glut overwhelmed demand, pressuring energy producers and high-yield credit markets. The rout coincided with a broader equity selloff that took the S&P 500 near a 22-month low.

Energy sentiment is sharply negative this month, driven primarily by oil prices collapsing to $26 per barrel—the lowest in 13 years—slamming upstream producers and exploration budgets. The rout reflects oversupplied markets and weakened demand growth, overwhelming any support from broader macro easing.

Stumpf stepped down under pressure from lawmakers and shareholders after weeks of scrutiny over the bank's sales practices scandal. His exit marked one of the highest-profile executive casualties of the post-crisis banking era.

Financial sector sentiment this month is neutral despite significant negative headlines, as the market has largely priced in the risks from legacy issues at major banks. The $14 billion demand tied to Deutsche Bank’s mortgage-bond liabilities and Wells Fargo’s $185 million fine for the fake accounts scandal reflect ongoing regulatory and litigation overhangs, but neither represents a new or systemic shock. Broader market stability and absence of contagion have kept sector-wide sentiment from deteriorating further.

Mylan came under intense public and congressional scrutiny for raising EpiPen prices by nearly 500% from 2009 to 2016, sparking outrage over drug affordability. CEO Heather Bresch defended the hikes, citing investments in awareness and access, while blaming the complex supply chain and pointing to $334 of the $608 price going to intermediaries like PBMs. The controversy highlights systemic issues in drug pricing, with market implications for transparency, regulation, and competition in the pharmaceutical industry.

Healthcare sentiment is neutral this month, weighed down primarily by the sharp decline in Valeant’s shares following a guidance cut and mounting credibility concerns, which rattled investor confidence in high-multiple names. While broader market conditions remain stable, the sector’s tone is tempered by scrutiny on pricing practices and corporate transparency, highlighted by Valeant’s struggles. No other major sector-wide catalysts emerged to shift the overall balance.

Oil at $26, metals at lows; cyclical bottom

Hanjin Shipping filed for bankruptcy in South Korea and the U.S., leaving dozens of vessels and approximately $14 billion in cargo stranded globally. The collapse disrupted supply chains, spiked shipping rates, and threatened holiday retail inventory, affecting major retailers and creditors. U.S. and international courts granted protection from asset seizures as Hanjin Group pledged collateral and injected funds to mitigate disruptions.

Industrial sentiment this month is weighed down by Volkswagen’s $14.7 billion U.S. emissions settlement, a significant liability for a major player in the sector and a signal of ongoing regulatory and operational risks in large-scale manufacturing. While the event is specific to one firm, it reflects broader exposure to compliance costs and reputational damage within the capital-intensive industrial space. The sector’s overall neutral read suggests these pressures are balanced against stable underlying demand, with no broad-based deterioration or improvement evident.

Southern California Gas Co. has permanently stopped a massive methane leak at its Aliso Canyon facility, which had been ongoing since October and displaced nearly 15,000 residents. The incident, one of the largest in U.S. history, has drawn scrutiny toward aging infrastructure and weak regulatory oversight, with implications for energy safety standards and potential financial liabilities for parent company Sempra Energy.

Utilities hit record highs on collapsing rates

AT&T announced a $85.4 billion acquisition of Time Warner, combining telecom and entertainment assets including HBO, CNN, and Warner Bros. The deal faces regulatory scrutiny over media consolidation concerns and potential antitrust issues. Market implications include heightened competition with tech giants and possible consumer impact from data and content bundling.

AT&T's $85.4B Time Warner bid combined content and distribution, and the Trump rally reflated sentiment, offsetting January turmoil and the Brexit scare. Positive by year-end.

Microsoft is acquiring LinkedIn in an all-cash $26.2 billion deal, with LinkedIn CEO Jeff Weiner remaining in place and reporting to Satya Nadella. The acquisition aims to accelerate growth in Microsoft's Office 365 and Dynamics platforms while enhancing LinkedIn's reach in the professional network economy. The deal is subject to shareholder and regulatory approval, with expected closing by year-end.

The tech sector remains neutral this month, with sentiment supported by Microsoft’s $26.2 billion acquisition of LinkedIn, a move signaling confidence in professional digital platforms and data-driven services. While the deal underscores strategic expansion in enterprise software and cloud-adjacent offerings, it does not materially shift sector-wide momentum. Broader market stability and lack of additional sector-specific catalysts keep the overall read flat.

Following Donald Trump's upset win, U.S. defense contractors rallied sharply against a falling broader market, with Northrop Grumman up about 5.4%, Lockheed Martin about 6%, and Raytheon about 7.5%. Investors bet on Trump's campaign pledge to add 90,000 soldiers, 42 Navy ships and 100 fighter aircraft plus expanded missile and nuclear defense. European names BAE Systems, Cobham and Thales also gained 3-4%.

Budgets were rising and Trump's November election on a 'rebuild the military' pledge promised a buildup, brightening the outlook.

A solid year with strong housing and CRE at peak valuations; Brexit pushed rates lower mid-year (a plus for owners), while the Trump-election yield spike late cooled the mood slightly.

AB InBev has finalized its $100 billion acquisition of SABMiller, creating the world’s largest brewer with a global footprint and diverse brand portfolio. The deal, approved by regulators and shareholders, includes divestments to Asahi Group and China Resources Beer to meet regulatory requirements. The combined entity, operating under the AB InBev name, is expected to strengthen market dominance and drive global beer industry consolidation.

Cheap gas early (oil $26), record auto sales, and low unemployment kept the consumer strong; Brexit was a brief June scare and Trump's win sparked a discretionary rally on tax-cut hopes.