Intraday Market Thoughts

Crashes & Crises after January

by Ashraf Laidi
Jan 31, 2014 18:28

Stocks post their first negative January performance since 2010. Declines in January have more commonly involved high-risk declines during the in the year – but not necessarily a decline for the rest of the year as the “January Barometer” suggests with its 73% accuracy. Here's a look at equities, using the Dow Jones Industrials index. 2010 – The last time stocks fell in January (-3.5% due to Volcker PropTrading speech) — Eurozone crisis kicked off and the May Flash Crash hit partly due to (GS DoJ investigation). 2000 – The bust of the dotcombust was kicked off by a 7% decline in January. 1998 – Another year of spectacular losses when the Asian currency crises coincided with damage in Russia and Brazil, a classic case of emerging markets collapse. 1990 – The year of the US Savings & Loans crisis and Saddam Hussein's invasion of Kuwait started off with a 6% January fall before leading to a 17% decline in Aug-Nov.

We expect the current downleg will stabilize near 1700 for the S&P500 and 15300 for the DJIA, coinciding with stabilization at 2.45% for 10-year yields.

In the latest Premium Insights, USDCAD broke above 1.12 for the first time in 5 years before tumbling by more than a full cent on reorts of large take-profit sell orders (reportedly Soros). The 2nd NZDUSD long was stopped out. Gold and AUDJPy remain in progress, as are USDJPY, whole EURUSD holds thinly near the 1.3480 stop on reports of an ECB rate cut as early as next week after fresh declines in Eurozone CPI.
Act Exp Prev GMT
CPI (y/y) [P]
0.7% 0.9% 0.8% Jan 31 10:00
Core CPI (y/y) [P]
0.8% 0.8% 0.7% Jan 31 10:00

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