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September is proving to be a challenging month for investors, living up to its historical reputation as a tough time for stocks. The S&P 500 experienced a significant decline of 4.2% last week, driven by growing concerns regarding the U.S. economy’s health. The monthly jobs report released on Friday revealed that job additions fell short of expectations, while Tuesday’s disappointing manufacturing data resulted in the index’s worst performance since early August.
Historically, September has been the weakest month for the S&P 500, with the index declining an average of 1.2% since 1928. In fact, it has ended lower 56% of the time during this period, according to Dow Jones Market Data.
As investors look ahead, all eyes will be on Wednesday’s inflation report to assess whether price pressures are easing. Additionally, the performance of major tech stocks, particularly Nvidia, will be closely monitored as they attempt to recover from recent losses. Analysts and portfolio managers are grappling with a more pessimistic outlook following a robust rally in the first half of 2024.
“We were already tensed up [ahead of the jobs report], and now it seems like economic data is not moving in the right direction,” said Callie Cox, chief market strategist at Ritholtz Wealth Management.
The Federal Reserve is widely anticipated to cut interest rates at its upcoming meeting on September 18. The key question remains whether the Fed will opt for a traditional quarter-percentage point reduction or take a more aggressive stance with a half-point cut.
Market observers, including Cox, were left wanting for clarity after the jobs report. While job growth in August was stronger than the previous month, the overall numbers still fell short of expectations, and the unemployment rate edged down.
Some investors are advocating for a more substantial rate cut to stimulate the labor market, while others express concern that such a move could send a negative signal to financial markets, potentially triggering a deeper downturn.
In addition to the uncertainty surrounding the Fed’s plans, market volatility is expected to persist as the November election approaches. Historically, October has been the weakest month for stocks during election years, with the S&P 500 averaging a decline of 1.4% since 1980.
Despite the S&P 500 being up 13% year-to-date, sentiment has shifted in recent weeks. The weaker-than-expected jobs report in July raised questions about the economy’s resilience and whether the Fed had delayed necessary rate cuts. The unwinding of popular trades on August 5 further exacerbated the situation, leading to the S&P 500’s worst day in nearly two years.
This downturn has reshuffled the market’s winners and losers, with Nvidia and other AI-related stocks losing some of their luster. Nvidia’s stock plummeted 14% last week, erasing a staggering $405.7 billion in market value—the largest loss for any company on record. In response, investors have shifted their focus to defensive stocks, with only the consumer staples and utilities sectors showing gains this month.
Should the S&P 500 finish September in the red, it would mark its fifth consecutive decline for the month.
The extent to which the so-called “September effect” influences market behavior remains uncertain. One prevailing theory suggests that traders returning from vacation may sell off their winners and harvest tax losses, amplifying market movements, according to Jay Woods, chief global strategist at Freedom Capital Markets.
“September kicked us in the teeth on day one,” Woods remarked. “Now, we’ll have to see if we can recover.”
Despite the recent market downturn, some metrics indicate that stocks may still be overvalued. Companies within the S&P 500 are currently trading at 21 times their projected earnings for the next 12 months, surpassing the 10-year average multiple of 18, as reported by FactSet.
In the bond market, Treasury yields fell following the jobs report, with the benchmark 10-year Treasury yield closing at 3.710%, its lowest level of the year. Typically, bond yields decline as prices rise, as investors seek the safety of U.S. Treasurys during turbulent market conditions.
“The question is how much does the Fed need to react to the idea of a slowing labor market as opposed to a shrinking labor market,” posed Steve Sosnick, chief strategist at Interactive Brokers.
As September unfolds, investors will be keenly watching for signs of recovery amid the prevailing uncertainty.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
