Rational Advisor

Historically, September has been the most difficult month for the Dow. For some further perspective, the chart uploaded from Dow Jones presents the average daily performance of the Dow during September since 1980 (gold line) and since 1896 (blue line). The chart illustrates how, on average, most of the Dow’s subpar September performance has occurred during the second half of the month. This second half of September weakness has been especially true during the more recent past (i.e. 1980 to present).

One of the concerns still out there are that more than $1 trillion of commercial paper is set to come due in the next six weeks - a big test for commercial paper market and worry for the banks.

If the CP issuers will need that funding banks will not want to tie up their reserves lending to other banks. Banks are reluctant to lock up liquidity and lock in a larger balance sheet by giving a 3-month loan to another bank, even at rates that would normally seem extremely attractive.

What does this mean, we can expect more firewiorks even after the Fed interest rate annoucnement, apparently it won’t be enough. This may be the most opportune time to add into your RRSPs, when everyone else is depressed.

Note: the earnings season for Financials in Canada has been strong, each of the banks have raised their dividends. And at times of fear there is a rush to quality investments such as Bonds and Dividends.

Rational

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