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September: Lots of Tension With Few Gains?

Traders are expecting lots of volatility in September around theFed meeting, brokerage earnings reports, triple witching expiration, and an historically poor performance in September. In other words, lots of apprehension and few are expecting any real gains in the month ahead.

One trader noted that it's important to figure out what's been priced in and what hasn't. Priced in: a Fed rate cut of at least 25 basis points, and most believe 50 bp is coming. What's not clear is whether they will have the intended effect, specifically whether a system that is in the process of deleveraging can by helped by lower rates. Most believe that it can be helped.

The big issue for the markets is the $300 billion of LBO debt that needs to get priced, beginning with First Data Corporation, which may begin the road show to sell $24 b in debt this week.

Economic data will be critical for the Fed; this Friday's payroll report is the key; a little bit of weakness will be the peg on which the Fed hangs its rate cut.

Josef Ackerman, head of Deutsche Bank, reflects the still-optimistic tone of most global executives. He said that while there have been losses and they will take time to work through the system, he said the DB had not had problems with funding availability and he is optimistic about the global environment.

Home Depot is buying back 289.6 m share, said the company is buying back about 15% of the company's shares at a price of $37 a share, just below Friday's close of $38.31. This despite the fact that it has not completed the sale of its HD Supply.

With the Shanghai and Hong Kong market near new highs, one trader noted to me that the market cap of domestic Chinese stocks plus the market cap of Chinese companies listed in Hong Kong has passed the market cap of the Japanese market last week.

Questions? Comments? tradertalk@cnbc.com

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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