October raises specter of crashes
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October raises specter of crashes
October raises specter of crashes
Commentary: Markets are in a game of fear factor with oil
By Peter Cardillo
Last Update: 12:01 AM ET Oct. 4, 2004
Editor's note: Peter Cardillo is chief market strategist with SW Bach.
NEW YORK (CBS.MW) -- Ever since the meaningful crashes of October 1987, and in October 1929, investors have been faced with the $64,000 question -- will this October bring another major market sell-off?
Indeed, the headlines of the financial papers never fail to remind investors of the negative events, as the fear factor by the gloom-and-doom forecasters manage to lift the level of the fear index.
We all know that great market declines usually stem from a climatic event over speculation creating a bubble in prices, runaway inflation, and strong economic conditions that need to be addressed by the Federal Reserve (raising of interest rates), but a new challenge has arisen -- terrorism. The fact is that terrorism and geopolitical concerns have been highlighted over the past several years and the markets seem to have adjusted to these concerns.
However, the real problem concerning investors this October is the direction of oil prices. Oil prices have been carrying a fear factor premium for some time, and the likelihood of the premium diminishing in the very short-term future seems to be less of a reality.
Geopolitical problems in the upcoming elections in Iraq will most likely intensify uncertainties in the oil pits, and these problems will continue to direct the daily movements of the global equity markets.
Indeed, the volatility in oil prices is not a good scenario for the month of October when the markets are reminded of the previous crashes, but the reality is that the price of oil is carrying a fear factor premium of $8 to $12 a barrel based on present fundamentals and that the U.S. economy is growing at a constant and solid pace.
While volatility may increase due to the fear factor, the market in general looks cheap with the tech sector and in particular the chip stocks that have been badly beaten down.
The bad news of the mild slowdown in the semiconductor sector has already negatively impacted the share prices ($SOX: news, chart, profile) and the fact is that most of the semiconductor companies have very solid balance sheets and in some cases very low ratios of revenues vs. market valuations.
From a contrarian's viewpoint, we think the market may outperform as we go into the U.S. elections with the tech group regaining leadership
Commentary: Markets are in a game of fear factor with oil
By Peter Cardillo
Last Update: 12:01 AM ET Oct. 4, 2004
Editor's note: Peter Cardillo is chief market strategist with SW Bach.
NEW YORK (CBS.MW) -- Ever since the meaningful crashes of October 1987, and in October 1929, investors have been faced with the $64,000 question -- will this October bring another major market sell-off?
Indeed, the headlines of the financial papers never fail to remind investors of the negative events, as the fear factor by the gloom-and-doom forecasters manage to lift the level of the fear index.
We all know that great market declines usually stem from a climatic event over speculation creating a bubble in prices, runaway inflation, and strong economic conditions that need to be addressed by the Federal Reserve (raising of interest rates), but a new challenge has arisen -- terrorism. The fact is that terrorism and geopolitical concerns have been highlighted over the past several years and the markets seem to have adjusted to these concerns.
However, the real problem concerning investors this October is the direction of oil prices. Oil prices have been carrying a fear factor premium for some time, and the likelihood of the premium diminishing in the very short-term future seems to be less of a reality.
Geopolitical problems in the upcoming elections in Iraq will most likely intensify uncertainties in the oil pits, and these problems will continue to direct the daily movements of the global equity markets.
Indeed, the volatility in oil prices is not a good scenario for the month of October when the markets are reminded of the previous crashes, but the reality is that the price of oil is carrying a fear factor premium of $8 to $12 a barrel based on present fundamentals and that the U.S. economy is growing at a constant and solid pace.
While volatility may increase due to the fear factor, the market in general looks cheap with the tech sector and in particular the chip stocks that have been badly beaten down.
The bad news of the mild slowdown in the semiconductor sector has already negatively impacted the share prices ($SOX: news, chart, profile) and the fact is that most of the semiconductor companies have very solid balance sheets and in some cases very low ratios of revenues vs. market valuations.
From a contrarian's viewpoint, we think the market may outperform as we go into the U.S. elections with the tech group regaining leadership
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