The other day my colleague across the hall commented: “Man, you’re bearish!.”
And he was right, because I’d been pushing my aged and creaky idea that we’re reliving the 1970s or the 1930s, and it’s not clear which yet. (I’ve been favoring the 1930s scenario, but the March ’09 until April ’11 rally has confounded my expectations and made this era seem far more like the ’70s.)
He’s an equities guy, so either scenario is bearish for him. The ’70s scenario is bullish for commodities, and therefore good for farmers, so therefore farmerwise I’m on the fence between bullish and bearish.
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Today the markets are doing all the scary, plunger stuff that brings up all those 1930s feelings. Europe is continuing it’s slow dance of death, stock indexes around the world are slumping today, and commodities have thrown out all their gains for this calendar year. Copper, the world bellwether for industrial growth expectations, is down about five percent today. Wheat is at a ten week low.
But before I indulge any more dreary 1930s images, let me offer a happier possibility: perhaps all this turmoil is just seasonal stuff. The weakest time in the equity markets every year is September and October. It’s one of the most predictable seasonal patterns in the market. Sometimes autumn slumps go on and get worse, like in 2008, but other times they turn around quickly, like 1987.
And in crops we have lived forever with falling prices in the Autumn as farmers across North America dump crops right off the combine. A tonne of selling gets done and prices get depressed.
So maybe that’s what’s going on: seasonalities in equities and crops are making a temporarily ugly situation.
I don’t really believe that, because it seems pretty clear that we’re falling into a worldwide recession, but then, as my colleague noted, I’ve been pathologically bearish on equities since 2007 and as I noted above, I have been wrong since March ’09 as world markets rallied 60 percent.
So perhaps there’s another seasonal pattern: every autumn I fall into the belief that the 1930s are here again, and every year I’m proven wrong. Let’s hope that’s a seasonal that recurs this year, and world confidence recovers and the harvest slump in crop prices ends and we get a long, long, long winter rally.
