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The Weekly Track seasoned

- The Weekly Track – Seasoned by Bob Savage
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The official start of Fall and the Harvest Moon greet markets as they grind into 3rd quarter end and look for the next spice to add to the ongoing rally back in risk. There is a common origin for the act of seasoning and the change in seasons – adding flavor or spices to food or drying, maturing foods or timber, against the time for sowing and harvesting all come from the same Latin root. If we learn anything in the past week, it’s about timing as the Monday bear market ran into hibernation on the reality of Trump tariffs on China not leading to the end of the world. Similarly, time is the critical component for the week ahead as its timing that drives alpha, along with risk management. Perhaps we see the return of seasoned traders in leading the pack of returns for the next few weeks. The issues that dominated September aren’t going to go away – just read the weekend headlines – China/US trade issues, UK/EU Brexit talks, Italy’s Budget, German Coalition trouble
s, Iran Sanctions and oil prices, FOMC policy and normalization in other central banks. All of the uncertainty around these themes make for the week ahead to be one of difficult choices for investors as they decide to either ramp up risk to drive 3Q returns or to pull back and prepare for more noise and volatility. The drop in the VIX and the higher US yields are a clear indication that most passive flows were running with the bulls last week. What maybe in the stew for next week comes from the seasoning choices of active managers. The seasonal pressure on risk will be hard to fight – 68% of the time the last week of September has been negative for US shares. While we all know that past performance is no indication for future returns, caution maybe in the cooking for investors as they seek to make something good out of a mixed 3Q with the UK, China, Canada, Spain and Italy all in the red while the DJIA is up over 10%, Japan Nikkei up over 7%, India Nifty 50 over 4%. Mean
reversion trades will be competing with the momentum chasers into month and quarter-end.