Guide for Nervous Investors: What to Watch This Month
If you thought August was rough, get ready for September.
Stocks ended a highly volatile August deeply in the red, fueled by continued worries about the European debt crisis and weakening global economy. September is expected to be more of the same.
Here are some top events that traders and investors will be closely tracking this month.
Sept. 8: Obama Talks Jobs/Economy
President Obama is expected to address a joint session of Congress to unveil proposals to create new jobs. However, skeptics worry that Congress will be reluctant to agree to increasing spending.
Meanwhile, the latest government employment report showed that the U.S. economy created no jobs in August, increasing investor fears that the nation may be heading for another recession .
“We’ll get some proposals [from Obama], but whether that’s going to be able to make it through Congress is going to be another question,” said Scott Brown, chief economist at Raymond James. “Washington is broken—we spent so much time bickering about debt crisis, when we should have focused on boosting economy.”
Sept 9: G-7 Finance Ministers & Central Bankers Meet
Treasury Secretary Tim Geithner is expected to attend a G-7 meeting with his international counterparts in Marseille, France to discuss the need for a reinvigorated global effort to support growth, jobs and financial stability.
However, investors have noted that the latest international meetings have achieved less than expected.
“There are talkers and there are do-ers and so far, they’ve only been talking,” said David Marcus, portfolio manager of Evermore. “What comes out of these meetings is so underwhelming that it’s meaningless yet the markets get spun out…the global economy is not going to be cured in one meeting or one announcement.”
Sept 15: Greece Due for More Aid
The debt-ridden nation is due for another round of international aid this month and some economists are hopeful that it will be granted.
"The [next] 10 days are absolutely essential both for [Greece] and the (EU/IMF/ECB) troika in order to work on the data on a technical level and prepare the tables on which the draft budget will be based," Greece’s Finance Minister Evangelos Venizelos said during a news conference.
The EU and the IMF , which launched a 110 billion euro, multi-year bailout of Greece in May 2010, are likely to take further action to avoid cutting Greece off from aid, amid worries over a contagion effect that the euro zone fears will morph from a sovereign debt crisis to a full-blown banking crisis.
Sept 20-21: Fed Meeting
This month’s extended two-day FOMC meeting will be monitored more closely than ever after Ben Bernanke said the Fed is ready to implement additional toolsto support the economy, but stopped short of explicit talk of another round of monetary easing during his speech at the annual Jackson Hole meeting in August.
"There’s nothing really the government or the Fed can do that’s really going to turn things around right away."
Investors are hoping that the Chairman will provide clearer details of the Fed's next moves following the FOMCmeeting.
“It could be another round of QE, but we’re more likely to see a shift in their portfolio—maybe sell shorter-term treasurys and buy more longer-term,” said Brown. “But there’s nothing really the government or the Fed can do that’s really going to turn things around right away—if it could have happened, they would already have done it.”
Sept. 29: Germany Votes on Bailout Fund
Germany’s parliament is scheduled to vote on an expansion of the euro zone rescue fund (European Financial Stability Facility) at the end of the month.
While Chancellor Angela Merkel’s center-right coalition is assumed to have enough votes to win approval of the EFSF’s expansion, a handful of German government lawmakers have expressed their opposition, raising concern Merkel may need further help from other parties.
“If we see this an unfavorable potential coming out of Europe, it will trigger a significant reaction in the markets to the downside,” according to Matthias Kuhlmey, managing director and partner at HighTower. “It may lead to a strong U.S. dollar in the short-term, but definitely we will see price increases in new form currencies such as gold.”
Sept 30: Spanish/Italian Short-Sale Bans Expire
The short-sale ban was extended in late August, in an effort to keep volatility under control in the European banking stocks amid negative sentiments on the sector.
“Short-selling bans are ridiculous!” Marcus said. “At the end of the day, they don’t achieve much—the regulator is artificially keeping stocks from going lower…If markets are going to drive it lower because of fundamental situations, it’s going to get there anyway.”
“In fact, all you’re doing is highlighting is that your bank has problems.”