Pinch, punch, first of the month, Rabbit, Rabbit, Rabbit, and all that.
Today is September 1 — and September is the cruelest month — for stocks anyway.
The below from Barclays Capital:
That’s most equity markets moving down, or sideways, during September. According to BarCap, most of this happens in the second half of the month — though the FTSE tends to lose most of the month’s value in the first 15 days. Bonds seem to do pretty well though, especially in the long-end.
While little can top the fireworks of September 2008 — the last September to live in infamy in the minds’ of investors — there are a few idiosyncrasies standing out this particular month.
You’ve got general jitters over double-dips in the US, brought about by those infamous economic indicators, and worries that they could eventually stretch to Europe. But on the continent, you’ve also got ongoing uneasiness from the sovereign crisis, and an impending need for bank issuance.
From UBS’ Alastair Ryan and John-Paul Crutchley:
[Bank] deposits declined by €11bn in July, emphasising how much rests on September’s pipeline of bank term debt issuance. With the stress tests having ‘approved’ the status quo of bank balance sheets, any funding shortfall could be taken poorly as an indication of banks’ (and regulators’) position. Conversely, a successful September would merely demand a successful October, as the sovereign stresses of Q2 10 have left banks typically behind where they would like to be in their term issuance.
Of course, we could all be over-reacting to the doom and gloom around us.
The good news is that all will have been revealed in just 30 days’ time.
Related links:
Investors superstitious about September slump – WSJ
Stocks: another scary September market? - Bloomberg
Ireland shakes, rattles and rolls - FT Alphaville