The Clouds Are Gathering: October and the US Stock Market

Despite a slight increase in optimism on the US stock market yesterday, there is little reason for joy. From China, the news is not that worse, but not encouraging. Evergande seems to be sold in pieces and clearly not at book value. So not all creditors and shareholders will get theirs. Meanwhile, another Chinese developer, Fantasia Holdings, failed to pay $ 206 million in bonds on Monday. So the problem of debts and non-payments is not only about Evergande.

In general, the clouds over the US stock market continue to thicken. The energy crisis does not even think to be resolved. Gas prices in Europe have surpassed 1,300, oil settled above $ 82 a barrel (Brent mark), and commodity markets as a whole have reached heights not seen since 2011. Yesterday's data on manufacturing inflation in the Eurozone (13.4% y / y) reminded that the natural result of all this will be a further unwinding of the inflationary spiral.

And then the reporting season begins. And it will obviously be worse than the previous one. In general, I wonder how long the markets will be able to ignore the negative current and future.

We already wrote earlier that September is, purely statistically, the worst month for the US stock market in terms of price dynamics. So October is the most dangerous month - it is characterized by the maximum volatility of the year. Just in case, we note that the 2 largest crises in the US stock market began in October. We are talking about Black Monday, when in one day on October 19, 1987, the Dow lost 22.6%, as well as on October 24, 1929, which is considered the beginning of the Great Depression.

Not surprisingly, in the latest poll from Allianz Life Insurance, 54% of investors surveyed said they fear a market crash in the foreseeable future and prefer to stay away from the US equity market. But you can take a more attacking position and sell on the US stock market.