Watching the Tape

News and Views from FinTrust Investment Advisors

Watching The Tape: October 3-7, 2016

Random gleanings from the world of business, investments and economics

Tape

October 3-7, 2016

 

2016-10-03-pic1

No spring nor summer’s beauty hath such grace
As I have seen in one Autumnal face….
                 John Donne, “Elegy IX: The Autumnal”33

 

Frankly we’re glad to be Donne with it: the hottest summer in recorded world history.

How hot was it?

  • Chickens were laying hard-boiled eggs.
  • Cows were giving evaporated milk.
  • NYC Mayor Michael Bloomberg was seen ordering a Big Gulp.
  • Congress put a fan in the debt ceiling.

No. That last one could never happen.  Congress ignores the debt ceiling.

The stock market was also hot this summer, rising almost 4% from solstice to equinox.  Most of that market heat came in the first two weeks of July;   by September, stocks barely simmered.   In September the Dow Jones Industrial Average hardly budged, with a net drop of 88 points.

Even thinner: the S & P 500 dropped 2 points.  The NASDAQ was down only 6 points for the month.

2016-10-03-pic2Dow Jones Industrial Average in September, source Yahoo Finance

Comment: Hard to believe the market didn’t change more in a month that brought us the first Presidential Debate and Elon Musk’s promise to colonize Mars.  According to polls, after watching the first more people were willing to sign up for the second. 

The October Effect

Students of market history often think of October as the “crash month”. Three of history’s most memorable and emotional market collapses happened in October:

  • The Panic of 1907 (October 1907)
  • Black Tuesday, Thursday and Monday (October 1929)
  • Black Monday (October 1987)

So it may come as a surprise to some investors to learn that more bear markets have ended  in October than started in October, including the bear markets of 1987, 1990 and 2002.

This October is unlikely to be as quiet as September. As we look at the month ahead there are plenty of market drivers, including:

  • Weekly unemployment reports
  • Retail Sales on October 14
  • The Consumer Price Index on October 18
  • The GDP on October 28
  • Third quarter earnings reports: the biggest earnings day may be October 27, when Apple, Alphabet (Google) and Amazon all report.
  • Presidential Debates – October 9, October 19

 

Hurricane Matthew

Thinking about possible stock market drivers in October, we have to note that a Category Four hurricane, Matthew, may be headed for the Northeastern United States.  Possible courses:

2016-10-03-pic4Hurricane Matthew Models (courtesy Fox)

The Matthew map looks a lot like the forecasts made for Hurricane Sandy:

2016-10-03-pic5Sandy pre-US landfall forecasts (courtesy of Accuweather)

A little eerie. Sandy strengthened into a category 2 hurricane before hitting the Northeast in late October of 2012, causing $65 billion in damage and shutting down the U.S. stock market for two days.  Never gloom-and-doomers, we simply note Matthew is out there.

 

2016-10-03-pic6Wall Street following Hurricane Sandy (Courtesy CNN Money)

Comment: Fingers crossed that Matthew heads out to sea.

 

The Week Ahead

 

Economics

Wednesday, October 5: International Trade, Petroleum Status

Thursday, October 6: Jobless Claims

 

Earnings

Tuesday, October 4: Micron, Darden Restaurants

Wednesday, October 5: Monsanto, Yum Brands, Constellation Brands

 

 

Watching the Tape is a compilation of news, observations and views written and edited by Bill Kibler, Senior VP, FinTrust Investment Advisors. Information is provided by sources believed to be reliable, but FinTrust  is not responsible for accuracy.  The information herein is not a recommendation to buy or sell any security.  Past results are no indication of future performance.

 

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