Posted on 08/30/2011 8:25:26 AM PDT by SeekAndFind
The much ballyhooed Jackson Hole Federal Reserve conclave has come to a close, and now exchange-traded fund investors face a treacherous September.
This September is likely to be particularly volatile as Federal Reserve Chairman Ben Bernanke deferred any new simulative action until the now two-day Fed meeting on Sept. 20 and 21. Bernanke puts off easing talk until Sept. FOMC
Also, International Monetary Fund leader Christine Lagarde said the global economy was in a dangerous phase while Kansas City Fed President Thomas Hoenig, said last week that the Fed, “can’t do it all,” adding further to the uncertainty facing us as we leave the dog days of summer behind.
Beyond the gloom from the Tetons, a continuing stream of economic reports indicates that the economy continues to slow towards “stall speed.” Manufacturing has dropped to contraction levels and the revision to second-quarter GDP to 1% brought the economy perilously close to negative growth.
This week will bring a slew of economic reports that could make the September Fed meeting seem far, far away, among them home sales, (just in at -1.3% for July Pending Home Sales,) housing prices, consumer confidence, factory orders and the all important non-farm payrolls report on Friday.
Seasonality also points to a rocky ride ahead as Septembers are historically the worst performing month for the stock market. Since 1928, September has recorded more down months than any other month and also holds the record for the worst monthly drop in history which came in September, 1931, when the Dow lost -30%. Septembers can be an “up” month, but the percentage of positive Septembers is the lowest of any month on the calendar.
Beyond September, of course, comes the notorious month of October which is known for major stock market crashes
(Excerpt) Read more at marketwatch.com ...
Market pundits nearly always suck at explaining yesterday’s market moves.
The only thing they suck at WORSE is PREDICTING tomorrow’s moves!
Earthquake and hurricane — Obama has an alibi.
you don’t need to be a pundit to see that there is nothing in either social behavior or economic policy in any of the major world economies that calls for anything but concern.
True, that.
But we both know that the markets don’t always respond rationally to what we think we understand about the state of the world economy, either. :-)
The Won doesn’t need an alibi - he has the Ministry of Truth.
That needs exploration. When it is crystal clear that war has been declared on commerce, when their is incalculable deleveraging taking place globally, and when policy makers are on the verge of panic, the best you can hope for is volatility.
There is, imho, substantial pent up demand for the things that civilization needs and wants. But as long as foolish and malevolent are running the show (that is, in America), capital is on strike.
Until and unless some leading power (national or personal) steps on the scene, or the US returns to being the US, there is no reason whatsoever to expect markets to behave as they have in the past.
There is a new order about us.
>> That needs exploration. ... There is a new order about us.
I can’t disagree with what you said, beginning to end. What’s more, EVENTUALLY (I believe) the market WILL respond rationally, whatever that turns out to mean.
I’m just poking fun at a pundit who says he knows what will happen in *September*.
The fact that market "panics," to use the 19th Century term, almost all start in the Fall, was observed two hundred years ago. I hope we don't have (another) huge drop in the stock market. But it is more likely to happen in the net 60 days, than at any other time in the next year.
Five Biggest One Day Point Losses for the DJIA
1. 9/29/2008 -> -777.68 (meltdown after bailout fails to pass House)
2. 9/17/2001 -> -684.81 (first full day of trading after 9/11)
3. 10/09/2008 -> -678.91 (fear completely gripping the markets)
4. 4/14/2000 -> -617.78 (the Dot Com bubble is popping)
5. 10/27/1997 -> -554.26 (Asian stock market crisis)
Five Biggest One Day Losses for the Dow Jones Industry Average (as a %):
1. 10/19/1987 -> -22.61% (Stock Market Crash of 1987)
2. 10/28/1929 -> -12.82%
3. 10/29/1929 -> -11.73%
4. 11/06/1929 -> -9.92%
5. 12/18/1899 -> -8.72%
(Note: I'm not sure how old this data is)
So then, I should replace the maxim “Sell in May and go away” with the maxim “Sell in the fall! SELL IT ALL!!!”
:-)
kinda sounds like Dr. Seuss, eh?
I think the market is giving us an incredibly lucid read on things.
>> I think the market is giving us an incredibly lucid read on things.
When it’s up several hundred and then down several hundred and then up several hundred — each swing taking only days, and separated by only days — the only way I can interpret your statement is that “things” are incredibly volatile and no one (including the market) *knows* what the heck is up. But I guess the market is indeed “lucid” if that is indeed the reality.
that’s exactly what I meant.
roger
... substantial pent up demand for the things that civilization needs and wants. But as long as foolish and malevolent are running the show ... capital is on strike.
Very well said!
thanks. i suppose it sounds like something John Galt’s dog might say.
(Note, I’m not sure how old this data is)
At least back to 12/18/1899:)
bttt
"Days"?
How about "hours"?
There have been days recently when it's gone up 200 in the morning, then down 400 at lunch, then back up 600 in the afternoon.
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