We have Labor Day coming up which is the traditional end to summer and the commencement of the fall season. Over just the next few weeks, we can all sit on the edge of our seats (remember, in this game of musical chairs, you MUST remain in a seat) wondering what stupidity will be uttered out of Jackson Hole, Europe and the Fed. Normally I would say “it’d better be something good” but it really doesn’t matter any longer. It doesn’t matter because we are ALL in the same boat with no more fuel and various leaks springing up everywhere. Just to stir up the mix in case we needed it is our upcoming elections.
The latest rumored problem child is Margin Stanley (Get Your Money Out of Morgan Stanley—Fast! – Beacon Equity), whether true to this full extent or not who knows? True to “some” extent I would bet my net worth on. We know that George Soros and John Paulson have cut their exposures to the financials in general and piled into Gold over the last quarter, so much for being “civilized”! Greece is now out of money, Spain’s economy is reeling and their banks watched as 5% of deposits electronically walked out the door in July. Even the tried and true “jawboning” out of Europe is not working as central bankers and politicians are politely asking that “no one say anything” because it might not be the right thing! THIS is how a panic gets started so the mute button has taken on more importance. The numbers in the US are confirming a slowdown while China’s are something we aspire to but are downright scary.
I usually don’t do too much in the way of “market recap” as above but the “season” is really changing, you can feel it, hear it and see it with your own eyes. QE this and that has already been proven not to work and here we are 4-5 years after the onset of the global depression with higher debt levels , lower incomes and no more “White Knights” left to step in and save the saviors. History has shown us that the Sept.-Nov. time frame has hosted the biggest panics of all time, but why?
There are many theories on this, here is mine. When seasons change, it affects us both physically and psychologically. We innately know that winter is coming just as all plants and animals do. Trees lose their leaves, the birds fly south, horses, dogs etc. start to grow longer hair, bears prepare for and go into hibernation. The days become shorter and less sunlight causes a slowdown in general activity and in general “depresses” everything. Maybe it is just me but as the fall season progresses, I know that I don’t feel as “up” or optimistic as was the case in the spring and summer. This is simply nature.
Looking at this phenomenon from a financial standpoint, everything “moves” on the margin. Even a subtle shift in sentiment either buying or selling can create a very large change in the actual prices and this is what I believe happens. On the margin, people, investors, collectively become a little less optimistic and begin the process of “hunkering down” which turns the overall sentiment negative. If this “shift” occurs while the system is not on solid footing, BIG changes in price can occur which is what I think we have coming.
I will be very surprised if we can get through this fall season without something severely breaking and some sort of “reset” to asset values occurring. The last 3 fall seasons saw all sorts of spin to offset the seasonal changes in “mood”. Each year was another story, whether it was QE or “exit plans”, mark to market relaxations or new bailouts it was always something. And now, here we are at the beginning of a new fall season. As I said above, whatever the spin, spit and chewing gum that is used to hold this baby together, “it’d better be good.” Real good!
P.S. Feds: Too few Americans ‘turn to government for assistance’, the headline says it all. No need in ranting or raving on this one!
- None Found