That’s the market’s fear right now – there is more pain to come for stocks and the bottom is not in.
At last Friday’s Jackson Hole Symposium Powell communicated to the market that the Fed is going to fight inflation first and foremost. That means higher interest rates, higher mortgage rates, less disposable income for households, and less profitable companies. Investors are seeing high inflation creating higher wage bills and the verdict from many is that the bottom is still not in. Stocks, bonds, and shares have all been overvalued and now the fears are that more downside is to come.
So, looking at seasonal, they too confirm that this is not a time to buy any dips with September being one of the worst months for stock indices performance including Nasdaq 100, S&P00, DAX, Russel 2000, and Euro Stoxx. So, the message is clear – watch out for more selling.
Major Trade Risks: The major risk is that the US economy signals a major slow down from its incoming data and that causes the Fed to slow the path of rates which could allow stocks to recover.
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