For two days it’s been raining here in Winnipeg, with clashes of thunder scaring my dogs, delighting my children and making the world seem grey, menacing, cold and unpromising.
Here’s a good description of the situation: “The thunder was continuous. The lighning went on and off as though a child were playing with a switch. On the vast expanses of water, the heavy branches of riven trees floated and tossed like monsters. The fish of Gormenghast river swam out in every direction, and could be seen steering through the castle’s lowest windows.”
Actually, that’s from the novel Gormenghast, by Mervyn Peake, which I am re-reading at present. But it’s apropos.
It’s also a fitting description of the mood in the overall world markets, be they stocks, bonds, commodities: the world seems grey, grim, unpromising. Not black, mind you. It doesn’t feel like winter. But the equity markets are staggering along at levels they’ve been at for about a year – the Dow just doesn’t want to move far away from 10,000 – and commodities seem to have hit a plateau.
Here’s a collection of flat-looking markets:
Of course, the flatness in wheat and canola is a new thing and prices are a lot better than they were, so generally we should be happy and willing to suffer this type of stagnation. Flat highish prices are good. Stumbling along at this level through the winter would be a pleasant sensation.
But it’s going to be interesting to see where we go from here, now that the autumn is upon us. Commodities can trade contrary to and regardless of the equity markets, and that’s probably a good thing right now. September, October and November generally bring the biggest market slumps and crashes – 1929, 1987, 2008 – and all the lingering fears over deflation, double-dip recessions and general economic malaise could give us a couple of ugly months in the equity markets.
In 1929 and 2008 commodities got sucked down too, in lockstep with stocks, but that’s a rare phenomenon. That only happens directly during massive selloffs, when everyone liquidates everything. Hopefully we’re in a situation more similar to the 1970s, when stock market slumps could occur right beside commodity market rallies.
I’m thinking these dark thoughts today because it’s grey, rainy, a little chilly and all I read are accounts of delayed harvesting progress and the threat of frost increasing as crop maturity falls behind. If tomorrow the sun comes out, the skies are blue, the mosquitoes leave town and I read accounts of combines rolling, I’ll cheer up.
But the way the markets move will probably have a lot to do with the weather in Chicago, New York and London. How ever the weather makes people feel in the cities that stock and commodity traders live will probably set the short term trend, as thousands of traders and brokers return from summer holidays and cottage vacations. If they’re in a poopy mood because of rotten weather like this, we might take a bit of a battering, as they do the trader equivalent of kicking the dog because they’re in a bad mood.