Aug 1, 2019

August has been the S&P 500's worst month over the last decade

Dion Rabouin

The market reacts to statements about inflation from Fed Chair Jerome Powell. Photo: Drew Angerer/Getty Images

The last time stocks performed as well as they have so far this year was 1997, but historically as the market has boomed, August has brought significant slowdowns, analysts at LPL Financial warn.

By the numbers: "The S&P 500 has been down an average of 0.78% in August over the past 10 years, worse than any other month," LPL senior market strategist Ryan Detrick said in a recent note.

  • The S&P 500 has fallen an average of 0.05% in August since 1950, with only September being worse.
  • "Since 1990, when the S&P 500 has been negative during the month of August, it was down 4.6% on average, again the worst out of any month."
  • "August 1990 is when Iraq invaded Kuwait; August 1997 had the Asian contagion; August 1998 had the Russian debt crisis and Long-Term Capital Management (LTCM) collapse; August 2011 gave us the U.S. debt downgrade; and August 2015 delivered the Chinese currency crisis," Detrick added.

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Dion Rabouin

The stock market is running out of reasons to go higher

Photo: Eduardo Munoz Alvarez/Getty Images

Stocks jumped on Monday as investors bought optimism that a U.S.-China trade deal could be salvaged, despite a lack of tangible evidence that progress is being made.

The state of play: The market will need the animal spirits of trade-war hope, because many of the fundamental catalysts that have buoyed stock prices in years past are starting to unravel.

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Exclusive: Goldman Sachs survey finds investors expect long trade war

Illustration: Sarah Grillo/Axios

Wall Street is hunkering down for a longer, more intense trade war, according to Goldman Sachs' monthly poll of more than 1,000 of the bank’s institutional and corporate trading clients, which found that most expect tariffs to hold steady as talks continue.

The backdrop: The survey, which gauges the sentiment of sophisticated investors about market-related topics, was conducted on Aug. 1-2, as President Trump said he would tax the remaining $300 billion worth of Chinese imports next month.

Go deeperArrowAug 12, 2019
Dion Rabouin

Worry grows about China's falling currency and rising dollar debt

Data: Institute of International Finance; Chart: Axios Visuals

The Chinese government had put plans in place to reduce the high levels of debt in the country's economy this year, but the negative economic effects of the trade war have put those plans on the back burner and companies are again levering up, in large part with dollar-denominated debt.

Why it matters: As the yuan weakens, debts held in dollars get more expensive. That could pose a major problem for China should the economy continue to slow. It would also mean problems for the rest of the world, as China is the planet's No. 1 trading nation.

Go deeperArrowAug 12, 2019