03 September 2007

September Divinations

Always a useless exercise, predicting the future. However armed with a few statistics, I guess we can make a better "guess".

Anyone who has read CNBC over the weekend will have had the "heads up" that September is statistically the worst month of the year, set out in table form from their site:

Most have October locked in as the scariest month because of the few crashes that have occuredin October, but in actual fact, in most years October is up. Apart from those crashes, it's usually a good month. It's September that has quietly put in the hard yards as the crappiest month of the year.

For those who like a more graphical format, here is a bar chart I found at The Ducster's site:

Add to these statistical probabilities, the problems in the credit markets... yeah, yeah I know it's gone quiet on that front. It's very quiet, almost too quiet. I don't believe the problems have gone away or have been resolved, just a dearth of news on the subject; we don't really know what's going on deep in the bowels of financial institutions. According to my few little contacts in the institutions, they themselves don't know the extent of the problem, so everybody is keeping mum.

If the news breaks the surface the surface again, it could be truly fugly.

On the other hand, there is the possibility of the morally hazardous rate cut. In this interest rate obsessed stock market where rates are seemingly the only important fundamental, that could send the the permabulls into a muck lather buying frenzy.

I guess it all boils down to what corpses float to the surface in the next two or three weeks, but I'd be less surprised by new lows than new highs... not that I'd be surprised by new highs. There are still plenty willing to ignore the fact that we are likely to be moving into a credit crunched period of the cycle.

Austrian bust anyone?

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