A Graphic View Of The Rolling Bear Market 

By now, global investors should understand that a new regime of rising interest rates, quantitative tightening, trade tensions, and currency crises in emerging markets, could suggest that a worldwide rolling global bear market has developed, one that could spill into the US in 2019.

"In fact, the bull has turned into a bear in many places: a growing number of equity indexes across the globe have slipped into ‘bear’ territory – commonly defined as a price drop of 20% or more from their highest levels in 52 weeks. The share of bear stocks by index is catching up all over the world too – from West to East, from developed to emerging markets," said Reuters.

Measured from 52-week highs, the performance of the MSCI All World Index has stalled but does not appear troubling. Taking a look at the S&P500 and European STOXX600, for example, are not yet in ‘bear’ market territory. Reuters indicates that a closer examination reveals the share of constituents in bear markets in both these indexes has exploded in 2018. As for China, 90% of the country's stocks are in a vicious bear market as of November while CSI300 has declined more than 20% since mid-2018.

The Bull-Bear Divide, the difference between bullish and bearish sentiment surveys conducted monthly by the American Association of Individual Investors, shows that US investor optimism of the stock market is quickly fading into 2019.

In addition to the disturbingly graphic view of global bear markets above, Fed vice chairman Richard Clarida on Friday emphasized the Fed's growing concerns of the global economy, warning that there is "some evidence of global slowing."

This confirms what we said on Wednesday in our Powell post-mortem: "the Powell "Fed put" is still hundreds of points below the current level of the S&P," which means the spillover in the global bear market could force US stocks much lower in the next couple quarters.