Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Stay on top of the latest market trends

Subscribe to Axios Markets for the latest market trends and economic insights. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Sports news worthy of your time

Binge on the stats and stories that drive the sports world with Axios Sports. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tech news worthy of your time

Get our smart take on technology from the Valley and D.C. with Axios Login. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Get the inside stories

Get an insider's guide to the new White House with Axios Sneak Peek. Sign up for free.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Denver news?

Get a daily digest of the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Des Moines news?

Get a daily digest of the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Twin Cities news?

Get a daily digest of the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Tampa Bay news?

Get a daily digest of the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Want a daily digest of the top Charlotte news?

Get a daily digest of the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Photo: Jeenah Moon/Getty Images

The massive losses in oil prices and U.S. and European equities were not countered by gains in traditional safe-haven assets on Wednesday.

Why it matters: The unusual movement in typical hedging tools like bonds, precious metals and currencies means they are not providing investors an asset that will appreciate in the event of a major equity selloff.

  • That could be a serious threat to savings and retirement portfolios, which are built to minimize losses by investing in a combination of stocks, bonds and other assets that are supposed to provide a safety net.
  • The erosion of these correlations has boosted the popularity of so-called buffer ETFs, which function almost like annuities for stocks, and cash among investors.

What's happening: The S&P 500 fell 3.5%, its largest drop since June 11, and the Nasdaq fell 3.7%, outpacing earlier losses in European stocks as France imposed a new nationwide lockdown and Germany moved to implement one-month partial restrictions.

  • The pan-European Stoxx 600 closed 3% lower.
  • The Cboe's volatility index jumped above 40, reaching its highest since June.
  • Brent crude oil prices fell by more than 5%, and U.S. West Texas Intermediate (WTI) crude dropped by 6%.

What they're saying: "Risk sentiment took a nose dive on Wednesday amid more concern around the spread of COVID-19 and renewed restrictions in Europe,"ANZ analysts wrote in a note. "This was seen alongside ongoing concerns about failure to agree on U.S. fiscal aid before the election next week, adding to a weak economic picture."

The other side: Treasuries were flat on the day, even though yields have risen significantly since the beginning of October.

  • Gold fell by 1.7% in spot markets.
  • The Japanese yen gained just 0.1% on the day.
  • The dollar, which proved to be the world's most popular safe haven during March's market meltdown, also was little moved against most currencies.

Reality check: "An important nuance is that the risk-off move in the equity market also interacts with the presidential election and the likelihood of additional future lockdowns," Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, wrote in a note to clients.

  • "As Biden's odds of winning the White House are rising, so too are the chances that some form of additional lockdowns (be it targeted or broad-based) may occur this winter/spring; after all, the Democratic nominee has previously expressed a willingness to impose lockdowns if recommended by scientific advisors."

Go deeper

Dion Rabouin, author of Markets
Jan 12, 2021 - Economy & Business

For all the fuss, the dollar rally has been underwhelming so far

Data: FactSet; Chart: Axios Visuals

The dollar index rose for the fourth straight session on Monday, worrying investors that the recent rally that has sent the dollar lower as stocks have risen higher could be coming undone.

What they're saying: "The appreciation of the dollar is coming at a time of not only rising yields but a risk-off period created by heightened uncertainty about political developments in the U.S.," Paresh Upadhyaya, director of currency strategy and portfolio manager for Amundi Pioneer Asset Management, told Reuters.

52 mins ago - Health

Fauci: Children "very likely" to get COVID vaccine at start of 2022

NIAID Director Anthony Fauci. Photo: Win McNamee/Getty Images)

Children under age 12 will "very likely" be able to get vaccinated for coronavirus at the "earliest the end of the year, and very likely the first quarter of 2022," NIAID Director Anthony Fauci told "Meet the Press" Sunday.

Why it matters: Children generally aren't at risk of serious coronavirus infections, but vaccinating them will be key to protecting the adults around them and, eventually, reaching herd immunity, writes Axios' Caitlin Owens.

Virginia lawmakers vote to legalize marijuana in 2024

Virginia Gov. Ralph Northam. Photo: Alex Edelman/Getty Images

Lawmakers in Virginia on Saturday approved compromise legislation that would legalize marijuana in 2024, putting the state a step closer to becoming the first in the South to end prohibition on the drug, the Richmond Times-Dispatch reports.

Why it matters: The legislation will make Virginia the 16th state to legalize marijuana, per Politico. It would add to a slate of laws that have seen Virginia move in a more progressive direction during the tenure of Gov. Ralph Northam.