No Joy in Stockville

Oh, somewhere in this favored land the sun is shining bright; the band is playing somewhere, and somewhere hearts are light,
and somewhere men are laughing, and somewhere children shout; but there is no joy in Mudville - mighty Casey has struck out. 


Stock market rally fizzles into quarter end. By mid-September, US stocks recovered half the losses sustained in August, but the rally did not hold, leaving the S&P 500 just above the YTD low set August 25th, and barely above the low set last October.  Stock prices fell 11.7% from the May 2015 all time high, and declined 6.4% in Q3 2015. Prices recovered smartly the first two days of October despite a poor jobs report. 

[US and World Market returns

How concerned should we be?  For the first 7 months of 2015, stocks traded in an exceptionally tight range as the Greek debt crisis played out.  Just as that concern resolved, a new concern - China currency devaluation! - seized the imagination of investors.  Oddly the modest 3% decline in the renminbi in August upset investors more than the 20% decline in the Euro since May 2014.  Odd because US exports to China represent 7% of total American exports, and 1% of GDP, while exports to the Eurozone represent 12% of exports   The Euro devaluation has a far greater negative effect on US corporate revenues and earnings. 

Read the entire commentary here.