1 00:00:02,440 --> 00:00:08,240 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:09,240 --> 00:00:11,799 Speaker 2: I'm Stephen Carol and this is Here's Why, where we 3 00:00:11,840 --> 00:00:14,080 Speaker 2: take one news story and explain it in just a 4 00:00:14,120 --> 00:00:19,880 Speaker 2: few minutes with our experts here at Bloomberg. Markets have 5 00:00:20,000 --> 00:00:23,360 Speaker 2: their own seasons. Central bank decisions and company results may 6 00:00:23,400 --> 00:00:25,919 Speaker 2: be key dates in the calendar, but just like for 7 00:00:25,960 --> 00:00:29,440 Speaker 2: the weather, the month of the year can really matter. Well, 8 00:00:29,480 --> 00:00:31,760 Speaker 2: the January effect is in full forces. 9 00:00:32,159 --> 00:00:34,800 Speaker 1: I mean, August, there's nobody there, Volumes are out loads. 10 00:00:35,040 --> 00:00:36,360 Speaker 1: It always tends to be a little bit of a 11 00:00:36,400 --> 00:00:40,720 Speaker 1: bull at all time. Anyway, September though typically on average, 12 00:00:40,880 --> 00:00:43,000 Speaker 1: not a good month for stocks. 13 00:00:43,040 --> 00:00:45,760 Speaker 2: So January is traditionally a good month for the stock market. 14 00:00:45,920 --> 00:00:50,400 Speaker 2: September's bad. Wall Street lower points to historical market crashes 15 00:00:50,440 --> 00:00:53,960 Speaker 2: happening in October. But are these trends always born out 16 00:00:54,000 --> 00:00:57,160 Speaker 2: in reality? And do money managers pay any attention to them? 17 00:00:57,520 --> 00:01:03,080 Speaker 2: Here's why the calendar month matters to markets. Our Market's 18 00:01:03,120 --> 00:01:06,000 Speaker 2: Life Managing editor, Christina Quino, joins us now for more. 19 00:01:06,000 --> 00:01:09,200 Speaker 2: Hey Christine, what does the data tell us then about 20 00:01:09,280 --> 00:01:11,360 Speaker 2: good and bad months for the markets? 21 00:01:11,880 --> 00:01:14,679 Speaker 1: Well, Steven, I mean these are lore for a reason, right, 22 00:01:15,319 --> 00:01:18,760 Speaker 1: and so we do have a history of certain months 23 00:01:18,760 --> 00:01:22,480 Speaker 1: being particularly good or particularly bad for markets. So if 24 00:01:22,480 --> 00:01:26,040 Speaker 1: we're talking about September specifically, there is quite a long 25 00:01:26,200 --> 00:01:30,720 Speaker 1: history of this month just being a source of upheaval 26 00:01:30,840 --> 00:01:34,360 Speaker 1: and volatility across asset classes. For instance, we've seen the 27 00:01:34,440 --> 00:01:37,640 Speaker 1: S and P five hundred fall every single September since 28 00:01:37,640 --> 00:01:40,600 Speaker 1: the nineteen fifty so that's quite a good bit of 29 00:01:40,720 --> 00:01:45,120 Speaker 1: history there. And meanwhile, bonds have been particularly having a 30 00:01:45,120 --> 00:01:48,320 Speaker 1: bad time every September for the last ten years, and 31 00:01:48,520 --> 00:01:52,360 Speaker 1: gold as well has dropped every single September since twenty seventeen, 32 00:01:52,480 --> 00:01:54,480 Speaker 1: And so there is a little bit of lore here. 33 00:01:54,520 --> 00:01:56,760 Speaker 1: There is a little bit of history here, and I'm 34 00:01:56,800 --> 00:02:00,760 Speaker 1: sure that's feeding into market psychology in addition to all 35 00:02:00,800 --> 00:02:03,480 Speaker 1: the other real time catalysts that we're facing at the moment. 36 00:02:04,040 --> 00:02:06,920 Speaker 2: Yeah, can we determine what it is that I suppose 37 00:02:07,040 --> 00:02:10,320 Speaker 2: drives these trends or is it those last minute issues 38 00:02:10,320 --> 00:02:12,480 Speaker 2: of those kind of surprises for markets. 39 00:02:12,919 --> 00:02:15,120 Speaker 1: Well, I think it's a little bit of a combination 40 00:02:15,520 --> 00:02:21,040 Speaker 1: of human psychology but also the cycle of markets throughout 41 00:02:21,160 --> 00:02:26,120 Speaker 1: a calendar year, right, because the summer period, particularly over June, 42 00:02:26,200 --> 00:02:29,240 Speaker 1: July and August, tends to be quite upbeat for markets. 43 00:02:29,280 --> 00:02:33,840 Speaker 1: That's when we would get some of the summer season earnings, 44 00:02:33,960 --> 00:02:37,000 Speaker 1: and those tend to be quite upbeat in terms of 45 00:02:37,320 --> 00:02:40,560 Speaker 1: the outlooks for the rest of the year, and also 46 00:02:40,720 --> 00:02:43,400 Speaker 1: just generally the mood and markets tends to be a 47 00:02:43,400 --> 00:02:46,959 Speaker 1: bit more optimistic, probably because traders are off to their 48 00:02:47,080 --> 00:02:50,200 Speaker 1: various vacations around the world and maybe a little less 49 00:02:50,560 --> 00:02:53,320 Speaker 1: volumes and volatility, and so it doesn't really take much 50 00:02:53,600 --> 00:02:57,720 Speaker 1: to drive markets, and oftentimes a direction of that drive 51 00:02:57,880 --> 00:03:01,440 Speaker 1: tends to be higher. And so when we get into September, 52 00:03:01,480 --> 00:03:04,720 Speaker 1: there's definitely this sort of back to school feeling that 53 00:03:04,760 --> 00:03:07,399 Speaker 1: we get in markets, and so that's when traders come 54 00:03:07,440 --> 00:03:09,600 Speaker 1: back from their vacations, they take a look at their 55 00:03:09,600 --> 00:03:12,640 Speaker 1: books and then they realize, huh, maybe it's time to 56 00:03:12,919 --> 00:03:16,320 Speaker 1: de risk in some assets and also reconsider some of 57 00:03:16,320 --> 00:03:18,800 Speaker 1: their positions in their portfolios as they head into the 58 00:03:18,840 --> 00:03:20,440 Speaker 1: final months of the year. 59 00:03:20,720 --> 00:03:24,360 Speaker 2: So how do investors tend to deal with these broad 60 00:03:24,560 --> 00:03:26,799 Speaker 2: trends on markets? Is there an argument for everyone just 61 00:03:26,840 --> 00:03:29,080 Speaker 2: taking September off to try and avoid this. 62 00:03:29,680 --> 00:03:32,680 Speaker 1: I'm sure people can take September off, they would, but 63 00:03:32,760 --> 00:03:35,200 Speaker 1: the problem is they've already taken most of August off, 64 00:03:35,280 --> 00:03:38,000 Speaker 1: and so September's kind of a return to reality for 65 00:03:38,080 --> 00:03:41,280 Speaker 1: a lot of people in markets. The tendency for markets, 66 00:03:41,400 --> 00:03:45,960 Speaker 1: as with any sort of big trend that's difficult to counteract, 67 00:03:46,120 --> 00:03:48,880 Speaker 1: is sell first and ask questions later. And we've seen 68 00:03:48,920 --> 00:03:50,560 Speaker 1: it time and time again, and I think that's what 69 00:03:50,760 --> 00:03:54,600 Speaker 1: feeds into this lore of September being bad for markets 70 00:03:54,600 --> 00:03:58,120 Speaker 1: as well, because that's kind of ingrained in market psychology, 71 00:03:58,360 --> 00:04:01,480 Speaker 1: just because of the history that we've seen and how 72 00:04:01,520 --> 00:04:04,720 Speaker 1: it has been quite bad for different asset classes over 73 00:04:04,800 --> 00:04:08,480 Speaker 1: the last few decades. And this awareness again of the 74 00:04:08,520 --> 00:04:11,160 Speaker 1: fact that there's only now a few months left to 75 00:04:11,480 --> 00:04:14,920 Speaker 1: the year. That combination really just drives a lot of 76 00:04:14,920 --> 00:04:18,200 Speaker 1: people in markets to de risk and rethink some of 77 00:04:18,240 --> 00:04:21,920 Speaker 1: their positions and their views heading into the final push 78 00:04:21,960 --> 00:04:22,400 Speaker 1: for the year. 79 00:04:22,640 --> 00:04:25,479 Speaker 2: What are the sorts of events that can contradict these 80 00:04:25,560 --> 00:04:27,720 Speaker 2: usual trends, the exceptions that prove the rule. 81 00:04:27,760 --> 00:04:31,120 Speaker 1: Maybe there are exceptions in terms of kind of the 82 00:04:31,240 --> 00:04:34,359 Speaker 1: year that we're having, right I think it depends on 83 00:04:34,520 --> 00:04:37,919 Speaker 1: the vibe I suppose from various central banks and policy 84 00:04:38,400 --> 00:04:42,240 Speaker 1: across the globe, and whether there's a particularly big event 85 00:04:42,320 --> 00:04:45,159 Speaker 1: in a particular year like elections, for instance, tend to 86 00:04:45,279 --> 00:04:47,680 Speaker 1: uphen some of these trends as well, just because there's 87 00:04:47,680 --> 00:04:52,120 Speaker 1: that extra catalyst that investors are positioning for. These tend 88 00:04:52,160 --> 00:04:53,960 Speaker 1: to happen, of course, toward the end of the year, 89 00:04:54,000 --> 00:04:57,640 Speaker 1: at least when we're talking about US presidential elections for instance, 90 00:04:57,720 --> 00:05:01,720 Speaker 1: which this particular year is. This is something that could 91 00:05:01,760 --> 00:05:05,880 Speaker 1: potentially upset the historical trends that we've seen, just because 92 00:05:05,920 --> 00:05:10,640 Speaker 1: it's another additional catalyst that investors have to consider in 93 00:05:10,640 --> 00:05:14,560 Speaker 1: addition to the seasonal trends that we're already seeing this year. 94 00:05:14,600 --> 00:05:16,800 Speaker 2: Of course the US presidential election, as you point out, 95 00:05:16,880 --> 00:05:20,120 Speaker 2: but we're also in this very particular moment for central 96 00:05:20,200 --> 00:05:23,159 Speaker 2: banks where we're very focused on the path of interest 97 00:05:23,240 --> 00:05:26,040 Speaker 2: right cuts in some cases first interest rate cuts from 98 00:05:26,040 --> 00:05:28,719 Speaker 2: big central banks. Is that the sort of thing that 99 00:05:28,720 --> 00:05:31,640 Speaker 2: could mean none of the usual rules apply when we're 100 00:05:31,640 --> 00:05:34,240 Speaker 2: thinking about seasonal trends in twenty twenty four. 101 00:05:34,720 --> 00:05:37,560 Speaker 1: Well, it's certainly a factor that could be a wildcard seven, 102 00:05:37,600 --> 00:05:40,520 Speaker 1: that's for sure, just because, as you mentioned, it's the 103 00:05:40,560 --> 00:05:43,520 Speaker 1: first rate cutting cycle that we've seen in a while, 104 00:05:43,680 --> 00:05:46,880 Speaker 1: and markets are very different now compared with just a 105 00:05:46,920 --> 00:05:49,760 Speaker 1: few years ago, even just two years ago, they were 106 00:05:49,800 --> 00:05:53,080 Speaker 1: contending with massive rate hikes from the Federal Reserve and 107 00:05:53,160 --> 00:05:57,000 Speaker 1: various other central banks and runaway inflation. That's a very 108 00:05:57,000 --> 00:05:59,760 Speaker 1: different picture now, right, there's the sense of inflation is 109 00:06:00,200 --> 00:06:03,440 Speaker 1: mostly under control, and that's why center banks have that 110 00:06:03,560 --> 00:06:06,560 Speaker 1: confidence to push toward rate cuts. But then the last 111 00:06:06,560 --> 00:06:10,160 Speaker 1: time that we've seen rate cutting cycles as well slightly different. Right. 112 00:06:10,240 --> 00:06:14,600 Speaker 1: These tend to come during recessionary periods, which arguably we're 113 00:06:14,640 --> 00:06:17,560 Speaker 1: not particularly in at the moment, at least not when 114 00:06:17,640 --> 00:06:20,039 Speaker 1: you look at some of the recent data out of 115 00:06:20,080 --> 00:06:23,480 Speaker 1: the US and other major economies. Yes, there are signs 116 00:06:23,480 --> 00:06:26,320 Speaker 1: of a bit of a slowdown in these various economies, 117 00:06:26,440 --> 00:06:30,680 Speaker 1: but nowhere near that kind of large downturn that precipitated 118 00:06:30,760 --> 00:06:33,440 Speaker 1: a lot of previous cutting cycles. And so you know, 119 00:06:33,640 --> 00:06:37,440 Speaker 1: we are headed into another one this time around, and 120 00:06:37,640 --> 00:06:40,200 Speaker 1: there are some similarity, some trends that you can point to, 121 00:06:40,760 --> 00:06:44,240 Speaker 1: but it's a very different environment in terms of just 122 00:06:44,320 --> 00:06:47,599 Speaker 1: the overall health of the global economy now versus in 123 00:06:47,640 --> 00:06:48,480 Speaker 1: previous cycles. 124 00:06:48,839 --> 00:06:50,919 Speaker 2: So it's worth paying attention to the month and to 125 00:06:51,120 --> 00:06:54,200 Speaker 2: the year. Thank you very much, Christine Aquino, our Markets 126 00:06:54,240 --> 00:06:57,680 Speaker 2: Live managing editor. For more explanations, like this one from 127 00:06:57,720 --> 00:07:00,240 Speaker 2: our team of twenty seven hundred journalists and on us 128 00:07:00,279 --> 00:07:02,640 Speaker 2: around the world. Search for Quick Take on the Bloomberg 129 00:07:02,680 --> 00:07:07,560 Speaker 2: website or Bloomberg Business app. I'm Stephen Carol. This is 130 00:07:07,600 --> 00:07:10,480 Speaker 2: here's why. I'll be back next week with more. Thanks 131 00:07:10,480 --> 00:07:11,000 Speaker 2: for listening.