An equity strategist for Goldman Sachs is predicting a September selloff that happens so rapidly he is telling clients to protect themselves before Sept. 14.
The reason: Market disappointment over key meetings of the European Central Bank and Federal Reserve—all within the next 10 days.
An ECB Governing Council meeting takes place this Thursday amid growing expectations that ECB President Mario Draghi will lay out some dramatic measures, such as bond purchases or yield caps.
The Fed, meanwhile, meets on Sept. 12 and 13 amid hopes that the central bank will decide on a third round of quantitative easing.
ECB bond purchases or yield caps, ESM (Sept 6th, 12th)
“The market is expecting a lot from the ECB,” Gustavo Reis, an economist at Bank of America Merrill Lynch, wrote in a note to clients. “However, we look for little clarification on the bond-buying program. The likely market disappointment should intensify the pressure on Spain.”
Draghi’s plan involves the ECB buying bonds on the secondary market of countries that ask Europe’s bailout fund to purchase their debt on the primary market, which would require them to sign up to conditions. Neither Spain nor Italy has made such a request yet.
QE3 (Sept 12th-13th)
”I think that it’s clearly weak enough to justify more moves by the federal reserve. I don’t know that qe’s going to do it. everything in life hasdiminishing returns and true of quantitative easing. the first one did a lot for us. the second one a little bit for us. this one probably less than that. the fed needs to kind of hoard their ammo. they don’t need to blow it all at once. i don’t think it’s a foregone conclusion to do this on the 12th and 13th and clearlyleaning in that direction.”
- Earnings growth expectations weaken globally
- Gas Prices Are Up For The 9th Straight Week
- Peter Schiff: “We’re headed for a real economic collapse”
- FedEx Is One Of The World’s Biggest Bellwethers, And It Just Cut Its Forecast
- US debt eclipses economy, reaching $ 16 trillion this week
- Things in Europe continue to get worse
- Australia’s Economy Is In Worse Shape Than We Thought
- Moody’s warns on European Union debt rating
- Draghi remarks fuel Italy, Spain bond rally
- Spain to inject 6 billion euro into FROB bank fund: source
- Fears Rising, Spaniards Pull Out Their Cash and Get Out of Spain
- Local governments’ debt snowballs (Korea)
- San Bernardino Considers Reducing Police And Fire Protection Due To Bankruptcy
- Spain’s Capital Flight Now Worse Than Asian Financial Crisis
- Food-Stamp Use Climbed to Record 46.7 Million in June, U.S. Says
- Greece May Leave The Euro This Weekend
- September Just Begins, Things Are Already Falling Apart
Kind of a rough night in Japan.
US futures are down as well.
The after-hours warning from FedEx, that the economy is weak, and that earnings will go down is probably not helping.
Meanwhile, the Shanghai Composite is hitting a new post-crisis low.