When our terrible Jobs Report came out on Friday, the Asian markets were closed. They opened today and starting dropping . . . and dropping. Overall, it dropped about 3%, with Korea leading the way down at 4.4%.
Over the weekend, Angela Merkel lost an important election in her home state, ramping up speculation that she would not be able to deliver Germany's essential support for any plan to save the Euro-zone. When the European markets opened, they also started dropping . . . and dropping. Overall, it dropped about 3.5%, with mighty Germany leading the way down at 5.2%.
It is too soon for the futures market to tell me anything, but I expect the Dow will lose not less than 200 points at the open tomorrrow morning . . . and probably more.
There is very little good news, but isn't that always the case when you need it the most? And, don't expect history to help. As bad as August was, September and October are the weakest two months each year, historically.
Thinking about this month, this week will be highlighted by the President's over-hyped speech on improving employment. The only tool left in the Keynesian toolbox that could help would be another WPA or CCC (Civilian Conservation Corps), but that is a luxury for a nation without the crushing debt-load we have. Anything else he recommends will be DOA anyway. My suspicion is that the market will fall on Friday, after the disappointment of his speech Thursday night.
Next weekend, the G-7 finance ministers and central bankers will meet in Marseille, France. If there is no announcement of progress on the European debt crisis Sunday night, then I expect the markets will fall again next Monday.
On September 15th, the second tranche of the Greek bailout package is due. It is 110 billion Euros. Because Finland is still demanding collateral that will alienate other members of the Euro-zone who don't get collateral, because the recession in Greece is worse than earlier estimates, causing them to miss their first austerity targets, and because of Merkel's increasing weakness, there is a very high probability that Greece will then default.
Probably, the most important date to write on your calendar this month is September 21st. That is the day the FOMC (Federal Open Market Committee) of the Fed holds their next meeting. Normally, it is a one-day meeting, but Bernanke has scheduled two days for this meeting, to give the dissenters ample time to argue their case. The market will probably rise before the meeting, in hopes QE3 will be announced. I'm confident there will be an announcement, but it will not be the politically-charged QE3 (to be discussed later in another blog).
Remember September 29, 2008 when Congress failed to approve TARP, and the market crashed 777 points that day. On September 29th of this year, Germany's Parliament is expected to vote on the increase to the EFSF (European Financial Stability Fund). If that fails to pass, I expect another big market drop, both in Europe and the U.S.
On the last day of this painful month, the short-selling ban on Spanish and Italian bank stocks expires. They could easily plunge at that point, taking the European and U.S. markets on yet another ride to the cardiologist's office.
That's all the good news for September. I'll bet you can't wait for October in PREview?
Over the weekend, Angela Merkel lost an important election in her home state, ramping up speculation that she would not be able to deliver Germany's essential support for any plan to save the Euro-zone. When the European markets opened, they also started dropping . . . and dropping. Overall, it dropped about 3.5%, with mighty Germany leading the way down at 5.2%.
It is too soon for the futures market to tell me anything, but I expect the Dow will lose not less than 200 points at the open tomorrrow morning . . . and probably more.
There is very little good news, but isn't that always the case when you need it the most? And, don't expect history to help. As bad as August was, September and October are the weakest two months each year, historically.
Thinking about this month, this week will be highlighted by the President's over-hyped speech on improving employment. The only tool left in the Keynesian toolbox that could help would be another WPA or CCC (Civilian Conservation Corps), but that is a luxury for a nation without the crushing debt-load we have. Anything else he recommends will be DOA anyway. My suspicion is that the market will fall on Friday, after the disappointment of his speech Thursday night.
Next weekend, the G-7 finance ministers and central bankers will meet in Marseille, France. If there is no announcement of progress on the European debt crisis Sunday night, then I expect the markets will fall again next Monday.
On September 15th, the second tranche of the Greek bailout package is due. It is 110 billion Euros. Because Finland is still demanding collateral that will alienate other members of the Euro-zone who don't get collateral, because the recession in Greece is worse than earlier estimates, causing them to miss their first austerity targets, and because of Merkel's increasing weakness, there is a very high probability that Greece will then default.
Winston Churchill is famous for saying Americans will always do the right thing but not before exhausting all other possibilities. He could have said the same for the Europeans. So, I hesitate making a prediction. Nonetheless, the market has spoken. Sovereign debt of Greece due in only two years now pays over 50% in interest. (Imagine borrowing $100 thousand now but being forced to repay $225 thousand in only two years.) By comparison, the U.S. pays only 2% on two-year Treasury bonds.
Probably, the most important date to write on your calendar this month is September 21st. That is the day the FOMC (Federal Open Market Committee) of the Fed holds their next meeting. Normally, it is a one-day meeting, but Bernanke has scheduled two days for this meeting, to give the dissenters ample time to argue their case. The market will probably rise before the meeting, in hopes QE3 will be announced. I'm confident there will be an announcement, but it will not be the politically-charged QE3 (to be discussed later in another blog).
Remember September 29, 2008 when Congress failed to approve TARP, and the market crashed 777 points that day. On September 29th of this year, Germany's Parliament is expected to vote on the increase to the EFSF (European Financial Stability Fund). If that fails to pass, I expect another big market drop, both in Europe and the U.S.
On the last day of this painful month, the short-selling ban on Spanish and Italian bank stocks expires. They could easily plunge at that point, taking the European and U.S. markets on yet another ride to the cardiologist's office.
That's all the good news for September. I'll bet you can't wait for October in PREview?
