Fisher Investments Editorial Staff
US Economy

The Dog Days

By, 07/30/2009

Story Highlights:

  • With Congress in recess and much of the financial industry on vacation, regulatory wrangling and material financial news should cool until after Labor Day.
  • Trading volume may go down a bit, but stock prices can still rise. In the absence of Beltway blustering and material financial news, it's a real possibility.
  • Something dark and consequential could lurk in the wings—but that's always a prospect worthy of investor vigilance. Otherwise, expect a little relief from this year's intense news cycle.

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The dog days of summer are upon us. As scorching leather seats and universal stickiness prevail, folks find it hard to focus. Congress goes into recess for all of August and into September. And many in the financial industry take vacation too. For investors, be they at the beach or still hard at work, the dog days often mean a slower news cycle.

 

We're already seeing some heat-induced indolence. Though earnings season is still in full force, what else is out there? Not much. Regulatory wrangling continues but expect that conversation to cool (despite the heat) until Congress reconvenes in September. And with Wall Street away, there won't likely be much in the way of blockbuster banking news either. Luckily, Financials are breaking on a good note: Last quarter's strong bank earnings were just one sign the financial system continues strengthening. In fact, quarterly earnings have generally been pretty strong.

 

August may promote lesser headlines to the front page. Maybe we'll hear a louder play-by-play of the economic statistic tennis match. (Advantage green shoots, deuce, advantage withering weeds, deuce…) Unless you want whiplash week to week, try to tune out the daily commentary. Or casting for something more meaningful, there may be a few philosophical wanderings pitting Capitalism against Something Else. (Don't expect that one to be settled anytime soon.)

 

As some lucky folks dash for the nearest exit, what are the rest of us to do? If this story hasn't fallen on an empty desk (we sincerely hope it has)—those left holding down the fort may be bored until Labor Day. That's not necessarily a bad thing. Trading volume may go down a bit, but stock prices can still rise. In the absence of Beltway blustering and material financial news, it's a real possibility.

 

Scant news increases the likelihood a normally insignificant story hijacks headlines. Take care to avoid assigning too much importance to any melodrama. And of course, something truly consequential could be lurking—a prospect worthy of investor vigilance, no matter the season. Otherwise, expect a little relief from this year's intense news cycle. And for those battling the heat—a frosty iced tea and good beach book might do the trick.

*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.

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