Yesterday's rout is right on schedule: in presidential election years, markets peak right around Labor Day then trap door all the way until the election.
September and October tend to be weak in election years. This doesn't mean the world will fall apart, but just be aware the calendar over the next 8 weeks isn't doing anyone any favours. "Plans are useless, but planning is everything." Eisenhower Source: Goldman Sachs, www.zerohedge.com, Ryan Detrick
September is historically the worst month of the year for stocks:
The S&P 500 has fallen -2.3% on average in September over the last 10 years, marking the only month with negative returns. Since World War II, the average September return has been negative, at -0.8%. Moreover, the Volatility Index, $VIX, has seen an average spike of ~10% in September over the last 33 years. Subsequently, in October and November, the S&P 500 has seen a +1.6% and +3.8% rally on average. Markets are entering their most volatile period of the year. Source: The Motley Fool, The Kobeissi Letter
Is it sustainable?
Interest Expense, Social Security, and Health are set to account for 87% of the US government spending growth over the next 10 years. Government spending is estimated to grow from $6.8 trillion in Fiscal Year 2024 to $10.3 trillion in 2034, according to the CBO. $3.0 trillion of the $3.5 trillion increase come from Social Security, federal health care programs, and interest costs on the public debt. Interest costs are projected to be the fastest growing part of the budget, DOUBLING from $892 billion in 2024 to $1.7 trillion by 2034. The net interest share of spending growth could hit as high as 23%. Source: The Kobeissi Letter, CBO
Some good news on US inflation: 1-year inflation expectations declined to 4.9% in August, the lowest since the pandemic in 2020, according to the Conference Board Consumer Confidence Survey.
Over the last 2 years, inflation expectations have fallen from ~8.0% to 4.9%, recording a similar drop as during the 2008 Financial Crisis. As a result, expectations are now at levels seen in the 2015-2019 period. Furthermore, 1-year inflation expectations in the University of Michigan consumer survey fell to 2.8%, the lowest since December 2020. Source: The Kobeissi Letter
BREAKING: 90% of US cities saw a rise in year over year unemployment rates in July, according to the BLS.
Jobless rates jumped in 350 of the 389 metropolitan areas last month. Additionally, in 8 large metro areas with a population of 1 million or more, FEWER people held a job in July 2024 than in July 2019. At the same time, average weekly wages DROPPED in 43% of the 389 metropolitan areas. In 5 of the 8 highest-paying areas with average weekly wages above$1,400, salaries declined year-over-year. The US labor market is weakening. Source: The Kobeissi Letter
Speculators have turned Bearish on the U.S. Dollar for the first time since February 🚨
Source: Barchart, Bloomberg
The world's most important stock exchange and the world's most important stock index.
Source: J-C Parets
JUST IN: US RFK Jr. withdrew from the presidential race, and the Trump campaign announced a special guest in today’s rally
Source: Bitcoin magazine
