September stock markets closed losing most of the summer’s growth since June, then jumped to a strong start on October 1. Both stocks and bonds fell in September, although bonds just dipped about 1%. The major stock indices fell an average of -4.5% with nearly all sectors declining last month.
The recent real estate crisis in China with their giant company Evergrande struggling, has shades of our own crisis in 2008. However, Evergrande does not have the derivatives issues and is not another Lehman Brothers. China is still considered an emerging market in international investing and is currently underweighted at about 35% of a diversified emerging market investment. India, Korea, and Brazil now dominate emerging market investments. If the Evergrande winddown is orderly with debt issues resolved, our stock markets should receive a boost. A disorderly resolution to the Chinese real estate debt bubble, including social unrest, would cause a major drop in our stock market. A negative outcome seems unlikely at this time as the Chinese government is expected to stay involved in the process.
A rush of urgency stirs the turning of this season. Summer fruits give way to autumn ones as tender plants race against the first frost for final growth. Feathered inhabitants seek sheltered spots and feed for a warming layer against the chill. We anticipate a brilliant display as woody plants store abundance in their roots. Winter will come but today, today holds fleeting magic not to be missed.