A stormy autumn looms
Autumn is traditionally a bad time for the markets but this year, the halloween season is set to be a howler. Crises in the eurozone and America conspire to make this autumn one to forget.
It's been a "dreadful summer" for global equities, says David Oakley in the FT. In August, many markets saw their worst monthly slide since the one in October 2008 that followed Lehman's collapse. The pan-European FTSE Eurofirst 300 index slid by almost 11%. No wonder, says The Guardian's Heather Stewart. August "was the month of shattered illusions". The US debt stand-off made it clear that "Washington was not the cockpit of the world's unrivalled economic superpower, but a chaotic bearpit", while France and Germany couldn't agree on a new rescue plan for the eurozone debt crisis.
Not only can policymakers not agree, but they're rapidly running out of weapons that could potentially bolster growth anyway. Interest rates are near zero and there's no money for another round of bank recapitalisation if there's another banking crisis. Meanwhile, the macroeconomic data deteriorated rapidly.
If that sums up August, September is shaping up to be even worse. In the past few days there have been more signs that the global economy could be slipping back into recession. Last month saw zero net job creation in America. Global manufacturing surveys pointed to shrinking activity in the eurozone and miniscule growth in America and Britain. The British services sector is also only just growing.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
EU leaders continue to face a "dangerous combination of austerity exhaustion [and] bail-out fatigue", says Standard Chartered. Italy, which is too big for the EU to bail out, is backtracking on its austerity package and its bond yields are on the rise again, raising the spectre of default. The Greek government is missing its rescue package targets. Germany looks ever less likely to ride to the rescue, given the eurosceptic populace and the government's poor showings in recent regional elections.
Not only is the political and economic backdrop lousy, but market history also bodes ill for this month. In America, which sets the tone for world markets, September is the S&P 500 index's worst month, with an average decline of 1.1% since 1929. As Roger Bootle of Capital Economics points out, crises have often happened in September witness Lehman's collapse and the pound's exit from the ERM in 1992. Furthermore, the 1929 and 1987 market crashes happened in October. "Fasten your seat belts: we could be in for an interesting few weeks."
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.
-
Review: Eden Roc Cap Cana – fun, sun and golf in the Caribbean
Travel Eden Roc Cap Cana in the Dominican Republic offers everything from relaxing by the pool to a world-class golf course
-
Reeves delays cash ISA reform, but savers are not out of the woods yet
The chancellor has reportedly delayed plans to cut the cash ISA limit, which were set to be announced at Mansion House on 15 July, and will take more time to consult with the industry