It's October...you do remember what October means in the stock market...?
It's the month of BIG STOCK MARKET CRASHES...
At least it used to be...that is to older investors anyway...but then came the NEW ERA...and OCTOBER BECAME FUN! JUST ANOTHER UP MONTH FOR STOCKS...
EVERYONE HAS FORGOTTEN ABOUT THE GREAT OCTOBER STOCK MARKET CRASHES OF THE PAST, ala 1929 and 1987...
Hey, why worry, Greenspan has it all under control...and he would never do anything to hurt the markets or his chums on The Street... Yeah, well that was then and this is now...
IT MAY BE TIME TO RELEARN WHY OCTOBER WAS ALWAYS SO BAD IN THE PAST...
FOR OPENERS...OCTOBER IS THE START OF THE LAST QUARTER OF THE YEAR, WHEN SERIOUS INVESTORS START THINKING ABOUT---NEXT YEAR!
ALSO OCTOBER IS THE TIME WHEN ALL THOSE PREDICTIONS BY COMPANIES ARE PUT TO THE FINAL TEST...WILL THEY "MAKE" THERE ANNUAL NUMBERS, OR NOT?
This October has all of the ear marks of a BIG CRASH MONTH...
INTEREST RATES ARE GOING UP...NOT TO SLOW THE ECONOMY BUT TO SUPPORT THE DOLLAR AND STOP THE RELATED RISE IN OIL, WHICH IS "PRICED" IN DOLLARS... A STRONGER DOLLAR "MEANS" CHEAPER OIL, ETC...
Greenspan simply can not afford to quit raising rates now...the budget deficit, the trade deficits and the weak dollar simply won't let him! And of course, the Bank of China has a lot of "input" these days too!
Additionally, the market is still MASSIVELY OVERPRICED...historically speaking. In the 1929 debacle, a P/E of 20 was considered very expensive... Today a P/E of 20 "seems normal!" That will be ending soon...as we revert to REAL HISTORY...NOT THE FAKE HISTORY OF THE 1990's where the distortions of the bubble became the norm.
In short;
HIGHER RATES + HIGHER OIL + HIGH DEBT AND THE TWIN DEFICITS = AN OLD FASHION STOCK MARKET CRASH IN THE STYLE OF 1929 AND 1987... AND THIS TIME THE MARKET WILL LIKELY STAY DOWN BECAUSE THE ECONOMIC "TECTONIC PLATES" HAVE BEEN SHIFTING FOR SOME TIME NOW...BUT THE "REALITIES" IN THE MARKETS STILL ARE GEARED TO US AND EUROPEAN DOMINATION OF THE GLOBAL ECONOMY...
THAT, GENTLE READER, WE ALL KNOW NOW TO BE FALSE...
BUT LETS NOT CALL IT "THE GREAT CRASH."
LETS, PERHAPS, CALL IT "THE GREAT REALIGNMENT" OR THE "GREAT SHIFT" OR "THE GREAT AWAKENING OF THE WEST" OR "THE END OF THE GREENSPAN ERA" OR "THE END OF BUBBLENOMICS" OR THE "SHIFT TO THE FAR EAST" OR....whatever. The point is: IT'S OVER ON WALL STREET.
