Chris Hondros
You've probably heard it recently: Just wait until after the Labour Day weekend, when the summer vacation season is over, for the real trading to begin.
The idea is that the light volumes of the summer months encourage volatility, because there isn't enough trading to stop a few pessimists or optimists from driving the market. (Example: "We're going to know a whole lot more in overall tone of the marketplace after Labour Day, when we get fuller participation," Art Hogan of Jefferies & Co. told CNBC in mid-August.)
Yet volume statistics from the New York Stock Exchange show that the September trading bump is slight. There's no massive up-tick in volume once traders return from vacation.
The average daily volume in September on the NYSE and its related exchanges was about 1.93 billion shares, on average, from 2004 to 2009. That's about 8 per cent ahead of the average August daily volume of 1.79 billion shares.
The figures include the crazy September of 2008, when markets began collapsing in the financial panic; the 2.87 billion-share average daily volume was the third-busiest month of the six-year period, and it was 58-per-cent higher than the August volumes.
Outside of that month, September volumes have outpaced August by 3.4 per cent in 2009, and were even 30-per-cent below August, 2007, levels.
From 2004 to 2009, the margin of September activity was even smaller when compared to the June-through-August summer average: just 4.2 per cent more volume.
The three busiest months in the last six years? January, March and October all averaged more than 2 billion shares traded each day.
Imagine where copper could be if there was any sign of life in U.S. home-building?
As it stands, the metal is doing quite fine even as south-of-the-border residential construction remains stalled. Copper is at its priciest point in four months, and is less than 5 per cent from its 52-week high set in April.
Of course, copper is far more widely used than just in housing, and positive reports on the U.S. manufacturing sector (specifically, a gain for August in the Institute for Supply Management index) as well as Chinese industry are helping stoke the gains.
International giant BHP Billiton, in announcing its financial results Aug. 25, said there's "strong physical demand" for copper, and supplies aren't adequate for it - the classic recipe for price increases. Chief financial officer Alex Vanselow said "we haven't seen anything showing us that that's due to change in the near term."
Kevin Grewal, a financial blogger at the Seeking Alpha site and publisher of newsletter ETF Tutor, noted this week that copper inventories are declining on both the Shanghai Futures Exchange and the London Metals Exchange, with the Shanghai levels at a six-month low versus a four-month high in imports.
Mr. Grewal's advice, since he specializes in ETFs, after all, are the iPath Dow Jones Copper Index, a debt security; the PowerShares DB Base Metals, which splits its futures contracts equally among copper, aluminum and zinc; and the iShares MSCI Chile Index, since that country accounts for nearly one-third of copper's global production.
While enthusiasm for a global economic recovery returned with last week's positive economic reports, the American consumer remains beleaguered.
The total amount of outstanding consumer credit, both on revolving lines such as credit cards and non-revolving lines such as auto loans, has fallen in 16 out of 17 months, with January the only exception, note the folks at Boulder, Colo.-based Action Economics.
The July figures will be released by the U.S. Federal Reserve Wednesday, with a median forecast of a $2-billion (U.S.) drop and the Action Economics staff predicting a $3-billion drop. "Overall, recent data suggest consumer credit remains notably weak despite the notable improvement in the economy over the last year," write Rick MacDonald and Mike Englund of Action Economics.
Both numbers are worse than June's drop of $1.3-billion, but are improvements over some ghastly winter/spring figures: declines of $8.1-billion, $6.2-billion, $13.0-billion and $5.3-billion in February through May.
Now, it is not as if the spigot has closed: The overall amount of U.S. consumer credit is still around $2.4-trillion. But these month-by-month drops mean available credit is declining at significant annualized rates: For the second quarter, the Fed said, consumer credit decreased at an annual rate of 3.25 per cent and revolving credit, which can be adjusted more quickly, decreased at an annual rate of 9.5 per cent.
"Despite the stabilization in the economy and consumption over the last few quarters, this series has shown little improvement from the weakness seen during the peak of the recession," Mr. MacDonald and Mr. Englund said.
David Milstead