Daily Market Color December 21, 2018Investor Fear Continues to Drive Market Lower Investor Fear and Volatility Remain High Much of the same risk-off sentiment that characterized financial markets over the past two weeks was observed during today’s trading session: The S&P 500’s put-call ratio, a ratio of bearish bets to bullish bests, reached all-time highs at 1.84 VIX (commonly referred to as the “Fear Index”) closed at 30, making it only the third time in the past five years the volatility index has breached the 30.0 level US Treasurys rallied, with yields/swap rates declining 1-5bps across the curve, pushing the 10-year note yield to 2.79% (-2bps) Equity Markets Fall Once More The S&P 500 fell 2.06%, bringing the index down 13.39% on the month. Perhaps most concerning, the index fell on extremely high volume- nearly double the average volume of the past twenty days. No sector was spared, communication cervices and information technology stocks leading the way lower- closing down 3.07% and 2.99% respectively. Has M&A Activity Peaked for the Cycle? The final three months of this year are poised to be the slowest for mergers and acquisitions in over a year, down significantly from the record highs this past summer. M&A activity has typically peaked in advance of economic downturns as firms turn to acquisitions to bolster revenues after exhausting other levers. That said, there is still plenty of “dry powder” on the sidelines- suggesting that M&A activity may just be taking a breather amid the geopolitical tensions.