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“I didn’t know you were Catholic.” – Nancy Pelosi

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Futures have added to earlier gains following the latest batch of economic data which included Personal Income, Personal Spending, and PCE Inflation data.  There were no notable surprises, but if there’s one headline to take from the data it was that the PCE Core Deflator finally dropped below 4% (3.9%), although the move was expected.

News headlines for the last 24 hours have been focused on the fact that Congress has been unable to pass a measure to keep the government from shutting down this weekend, which is fitting given the fact that it was fifteen years ago today that Congress couldn’t get its act together and pass the $700 billion bank bailout plan.  The bailout bill ultimately authorized and led to the creation of the Troubled Asset Relief Program, otherwise known as TARP.  In the days leading up to the Congressional vote on the plan, then-Treasury Secretary Hank Paulson reportedly got down on one knee in front of House Speaker Nancy Pelosi and begged her not to “blow it up”, leading Ms. Pelosi to reply with the quote above.

Whatever your views towards TARP are in retrospect, when Congress failed to pass the measure, an already ugly market turned Medusa-like.  As shown below in the intraday chart of the S&P 500 from that day, you don’t need a label to show you when it was that the bill failed to pass. Just as the market was starting to stabilize from a morning swoon, the bottom fell out of the bottom, and by the time the closing bell rang, the S&P 500 was down 8.8% for its largest one-day decline since the 1987 crash on 10/19/87.  Since then, there have been four other days that were worse with two more in 2008 and then two more during the COVID crash. Ironically, it was probably the market’s reaction to the bill getting voted down that enabled passage a few days later.

Historically, the last trading day of September has had a negative bias.  Over the last 50 years, the S&P 500’s median change on this day has been a decline of 0.18% with gains just 44% of the time.  Trading has been particularly weak in the last two years with declines of over 1% on the last day of September each time.  Thankfully on Wall Street this morning, the only problem traders are dealing with is flooding rains getting to and from New York City (if they’re even leaving their houses in the first place).

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See what’s driving market performance around the world in today’s Morning Lineup.  Bespoke’s Morning Lineup is the best way to start your trading day.  Read it now by starting a two-week trial to Bespoke Premium.  CLICK HERE to learn more and start your trial.

“Baseball is the only field of endeavor where a man can succeed three times out of ten and be considered a good performer.” – Ted Williams

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Futures are getting a bit of a boost this morning as revised GDP for Q2 was slightly weaker than expected coming in at 2.1% versus forecasts for a reading of 2.2%. Other data saw some larger moves.  Personal Consumption was more than cut in half from 1.7% down to 0.8% while the GDP Price Index was revised down to 1.7% from 2.0%.  Initial Jobless Claims rose 3K from 201K up to 204K, but that was still more than 10K below the consensus forecasts. Overall, this data was market friendly pushing equity futures higher and yields lower.  The 10-year yield which touched 4.65% earlier is now slightly below 4.61%.

In a meaningless doubleheader to close out the MLB season 82 years ago, Ted Williams got six meaningful hits in eight at-bats pushing his average to .406 becoming the first player since 1930 and the last player since then to hit .400 (Williams also hit a home run on his last career at-bat on this day 19 years later in 1960).  Hitting .400 is next to impossible in baseball (hence the quote above), but in the stock market it isn’t very good.  Heading into today’s trading, the S&P 500 has traded higher on just eight out of eighteen sessions which works out to 44.4% of all trading days, but if the last two trading days are negative, September will finish off as a .400 month. If that happens, we’ll just call it Ted Williams month!

There hasn’t been a lot of good news to speak of lately, but maybe the image from our Seasonality snapshot below will brighten your mood a bit. While the upcoming week ranks in just the 29th percentile of all one-week periods throughout the year, the next month ranks in the 89th percentile, and the next three months rank in the 100th percentile.  History doesn’t always repeat itself, but from a seasonality perspective, it doesn’t get much better than that!

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