Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Stock Market Seasonal Trend, Here We Go Again Already?

Stock-Markets / Stock Markets 2012 Mar 24, 2012 - 04:34 AM GMT

By: Sy_Harding

Stock-Markets

Best Financial Markets Analysis ArticleWhat is it about the economic recovery so far that allows good news to last for only six months at a time before fears rise again and the economy needs another adrenaline fix from the Fed? The pattern has been clearly reflected in the stock market, which saw its historical pattern of making its gains in the winter months and suffering corrections in the summer months even more pronounced in 2010 and 2011.


And here we go again already?

Just when it seemed we could relax, the U.S. economic recovery surprising with its strength, the Greek debt crisis kicked into the bushes, and most global stock markets in impressive six-month rallies, here comes another set of dark clouds and rumbles of thunder.

Global economic reports were unsettling from all directions this week.

The closely watched 17-nation eurozone PMI index, which measures both manufacturing and service sector strength, dropped to 48.7 in March. That was the eurozone PMI’s third straight monthly reading beneath 50, which is the dividing line between expansion and recessionary contraction, indicating Europe is sinking deeper into recession..

The similar HSBC PMI index for China, the world’s second largest economy, shocked markets, coming in at 48.1, its fifth straight monthly reading beneath 50.

Worries also rose in the Latin America region on warnings from the World Bank that “more than other regions, commodity exporting countries in Latin America [like Brazil and Argentina] would be vulnerable to any decline in commodity prices that might accompany a credit event in Europe.”

At the same time, a research report on Latin America from JP Morgan noted the importance of China, a major buyer of commodities and raw materials from the region, saying, “China’s influence in driving Latin America’s growth has increased sharply since 2008, so whatever happens in China’s economy matters for Latin America even more.”

Asia, Europe, Latin America. They’re so far away. Should U.S. investors care?

Absolutely. Global economies have always tended to move in tandem, into and out of good times and bad times pretty much simultaneously. That tendency has become more pronounced over the last 20 years as countries around the world have become even more dependent on exporting their raw materials and manufactured goods to each other.

So, if other major global economies are experiencing slowing economic growth, some even sliding back into recessions, how reasonable is it to expect the U.S. to escape a similar fate?

Already we may be seeing early warning signs in this week’s U.S. economic reports.

Economists were looking for reports from the U.S. housing industry, the first since a month ago, to confirm the economic recovery is spreading into that important sector.

Unfortunately, the reports were disappointing. They were that new housing starts unexpectedly fell 1.1% last month, existing home sales fell 0.9%, the inventory of unsold homes jumped 4.3%, and new home sales fell 1.6% (compared to the consensus forecast that they would rise 3.8%).

The U.S. stock market stumbled some in reaction to the arrival of global dark clouds, while elsewhere, markets in France and Hong Kong plunged more than 3% for the week, markets in Brazil, China, and Germany more than 2%.

Meanwhile, areas often perceived as safe havens, gold and U.S. treasury bonds, which had fallen to multi-week lows, bounced back some as money flowed back into them.

One week is not a reason for concern.

But this week’s darkening economic clouds just as another six-month cycle from last October’s low rolls around, and with 1st quarter earnings reports just two weeks away, are reasons for investors to remain cautious and alert.

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.

© 2012 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in