Labor Day became a national holiday in 1894, signed into law by President Grover Cleveland, in response to the Pullman railroad strike in Chicago. Labor Day has traditionally been the unofficial last day of Summer (Fall officially begins September 22), although many schools are now starting in August. I’m not sure when that changed. My girls started 1st grade on Wednesday. I can’t believe how time flies!
The week heading into Labor Day is usually a slow and non-eventful series of sessions on Wall Street. Not so this year. Tensions in Syria are coming to a boiling point, which sent crude oil prices jumping to multi-year highs and stocks have given back some of their 2013 gains. Volume was the thinnest of the year, as many Americans are on vacation. Offices tend to be sparsely populated as the masses head to the beaches, the mountains or the lakes. Lower volume tends to exacerbate Market moves, and it’s certainly been the case in August. Volatility has been absent for much of the year, but it’s back. And just in time for September. If you recall, we generated some cash a few weeks ago for this very reason as we expected some choppiness ahead.
We anticipate an eventful September. Congress reconvenes, and the looming debt ceiling has already created political sparks. The Fed is expected to begin the unwinding of its unprecedented quantitative easing campaign launched in response to the financial crisis back in 2008. Interest rates have already jumped in anticipation, but questions remain as to how strong our economy really is, and how will it and the Market respond to the magic Fed elixir being reduced.
The Middle East is squarely in focus again. Syria presents a complicated global threat, one that is difficult to handicap. Egypt’s leadership and political future has yet to be resolved. Crude prices will likely stay elevated for the time-being. We expect more choppiness ahead as events unfold. Importantly, the Market is holding in quite well in the face of these issues. We’ll be keeping tabs on developments over the 3-day weekend.
Enjoy the weekend. We’ll be back dark and early on Tuesday. We’re on it.
By: Mike Frazier
