Tuesday, September 1, 2009

Beware September and October

Irwin Kellenr hasn't quite figured out the seasonal mini-Austrian business cycle thing going on in September/October period, but he knows track record.

"...the crashes of 1929, 1966, 1973, 1987, 1989 and 2008, to name just a few, occurred during these two months," writes Kellner.

He continues:

For one thing, while the major market averages are still below their year-ago levels, they have risen quite a bit from their lows of earlier this year. Using the Dow as an example, at Monday's close it was 47% above its 52-week low set in early March -- one of the largest percentage increases over this period of time in its history.

To make matters even more interesting, this rise was led by the banks, which soared more than 150% since early March, along with such other financials as insurance companies. Many analysts believe that these firms have yet to feel the worst of the after-effects of the bursting of the real-estate bubble.
Couple all this with the fact Bernanke isn't printing any money, and it becomes an extremely delicate period ahead. We are unlikely to get through this period without at least a major stock market break--and the possibility of a full second dip in the economy is not far behind.


  1. Ok, so yesterday I read Chris Martenson's report on the Fed's shell game of buying Agency debt from other Central Banks with new money and then those other Central Banks recycling those funds into purchases of the US Govt's new debt auctions. Effectively the Fed is monetizing the debt, Martenson concluded.

    I'm having trouble reconciling this with the viewpoint you have been expressing the past 1-1.5 months of Bernanke putting on the brakes and essentially halting the growth in the money supply.

    My question: In what ways is this new money in Martenson's analysis likely to effect the real economy and its capital structure?Obviously you're not going to know specifically where the distortions will occur, but maybe you have a better understanding of generally where the new money will show up? It seems to me that the increase in the money supply has not been halted, but instead it's currently seeping through another channel.

  2. New Fed money was put into the onky in the early part of the year.

    Since then anything they have done has been "sterilized," meaning they pump here, but withdraw over there.