Tuesday, 14 October 2014

Beware the Ides of October?

Chart forFTSE 100 (^FTSE)


It is an easy post to write every year, that stock market crashes happen in September and October. The major ones nearly always do, but the evidence is more mixed in years when there is not a major crash. The 3 largest declines in  recent times though are 1987, 2001 and 2008 - all those happened in September or October as did the Wall Street crash.

Since the beginning of September 2014, the FTSE and other markets have been hit pretty hard, as can be seen on the chart above. After a peak at very nearly 7000 in early September the FTSE is off to no only a year low, but touching the low for last year too. In fact you have to go back to the tail end of the Euro Crisis to find the FTSE performing so badly.

There are, as ever, many causes for this, one of the main ones is the FTSE still being resource stock heavy so the fall in Oil and Mineral prices - generally good news for the world in terms of inflation and prices, turns into bad news for the FTSE.

However, it also shows that finally the geopolitical effects of ISIS, Ebola and Russia are having an effect on the global sentiment. The latter is more or less forgotten, but in reality the sanctions are causing major dislocations in the oil markets - which is what the West aimed for, but still, the world is not harmonious.

Worse for the pension investors and others is that none of the above 3 issues is going to go away. Nor are the falls in resources prices, although they may level off - albeit another 10% down or so from here.

We'll just have to hope the Santa rally kicks in from next month as per usual!
 

14 comments:

Steven_L said...

Only another 500 points or so to go before my C@W 2014 prediction of 5,800.

I'd have thought cheaper shares are good for most pension investors, who can buy more equity?

Hope you all took my tip on June 2015 sterling short term interest rate futures a couple of weeks ago. That's my Xmas paid for, now I'm off to support the high street.

Steven_L said...

OK, I'll give you all another one. England play Sir Lanka away in 7 ODI cricket matches between 26th Nov and 16th Dec.

William Hill are offering 4/9 on Sri Lanka to win the series, which is a dead cert if you ask me.

MyDigressingName said...

No posts on immigration/kippers of late so I'll just drop this here...
I posted it elsewhere already, but I think its important and should be considered when Macho Dave waves a bit of paper about saying 'No to Immigration' in his inevitable weedy oxbridge voiced Chamberlain moment.

To wit - the Labour party have come out about 'sharing the concern' people have with immigration. This is exactly the opposite of what they think and happily, a huge mistake, as most people will realise a bare faced lie when they see it.

David Cameron badly needs a tough anti-immigrant stance and I suggest that he will introduce swingeing cuts to immigration in the run up to the election.

These will be real, quantifiable and 'shocking'.

So good will the ruse be that many members of his own party will howl and protest - but the new 'Im listening to the people' tough-guy stance will hold fast.

How will this be achieved, I hear you ask?

Well, Mr Cameron will announce a huge reduction in the number of Visas given out to non-EU migrants. This will be big and will be focused mainly on Nigeria, India and Pakistan.
Of course it will all be a cynical charade, an outright lie even.
In fact it will be the exactly the kind of deception that has the public in despair of the current establishment.

You see, just last week Theresa May traveled all the way to Dublin to sign a joint UK/RoI visa deal.
This will allow holders of 'Irish' visas to enter the UK.

The result will be a huge decrease in visas granted by the UK govt; a tangible, quantifiable metric to hang the govts new tough-on-immigration stance.

Of course that those refused entry visas to the UK can just march down the road to the Irish embassy and gain the same status without appearing in UK immigration figures is just coincidence, innit?

MyForgetfulName said...

Forgot the supporting link.... oops

http://www.irishtimes.com/news/social-affairs/uk-ireland-visa-deal-an-historic-pact-frances-fitzgerald-says-1.1953778

Jer said...

MDN/MFN

Thanks, those of us with Russian friends and relations are grateful.

Budgie said...

Steven_L, shares may be cheaper to buy now than 4 months ago, but the shares already bought are also cheaper. Since most pension pots are bigger than annual contributions there has been a significant diminution of pension pot value.

Suffragent said...

Enter the BOE with its magic money from thin air machine. After all, share and house prices are the only things the Government (as puppets to the financial system) give a toss about. They always roll out this crap about every body’s pension being destroyed by the fall. The only reason that is the case, is that the pension funds have always been the patsy’s for the trading houses. The poor pensioner, already forced by law to invest in a pyramid scheme (that could only work for a few more years if we let immigration rip until we run out of people on the planet), takes the full hit on the downturn. Then the market turns, passing previous highs but the poor bastard who’s grafted all their life, only gets a small increase due to fees and commissions. It’s a rigged casino and anybody that believes it has anything to do with investment is an idiot (if you disagree please explain to me how HFT helps business). The games and “complex investment vehicles” have created a monster that has no reflection on reality and so large that the GDP of the planet (never mind the resources) couldn’t pay the return in generations. Don’t worry about the fall and how far it goes it WILL bounce back for the Christmas bonuses. Until it doesn’t

Budgie said...

Unfortunately, Sufferagent, your semi-Marxist pub bore ramblings, if put into effect, would see me in a prison camp, and you alongside me.

Steven_L said...

Just double checked my C@W prediction, it was FTSE 5,900. Only 300 points or so to go.

I need one to come in after Portugal's abject failure in the world cup!

Suffragent said...

Budgie
"Pub bore ramblings" I'll give ye but I'm as far from a Marxist as they come. If you Hold the city as the burning torch of capitalism, your not the chap I thought you were (maybe you've been watching too much BBC :-)
My feelings on socialism? My only social responsibility is to my family, friends, neighbours in ever decreasing order. I don't believe the state should steal more than 10% of my earnings. To quote Devils Kitchen "If more than half the population is reliant on its income from the state, cant the productive minority just have a full time slave"

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