October review, ugh!

By any measure October was one of the worst months for the stock markets ever. After going into free-fall beginning in Sep, Columbus Day brought a huge relief rally from which markets have steadied a bit, even if the VIX, volatility index, remains in uncharted, record high levels near 60.

Below are charts covering the last 3 months for the Dow Jones Industrials, the Alerian MLP Index & Dow Jones REIT Index. They show a relatively quiet period in Aug, followed by the dramatic sell-off. While there is no index for high yield (junk) bonds funds, their price pattern followed a similar pattern. However, MLPs, REITs & junk bond funds remain at depressed levels with many sporting double digit yields.


Dow Jones Industrials --- 3 months





Alerian MLP Index --- 3 months





Dow Jones REIT Index --- 3 months





The recovery in the last couple of weeks is encouraging & mirrors the banking system getting its house in order thanks to federal reserve systems around the world going overboard accommodating banks. Unfortunately economic problems keep droning on as it looks like the worldwide economy has begun a significant recession.

International cargo shipping, measured by the Baltic Dry Index, is off dramatically from recent levels, very discouraging. Last week, the index fell to 982, down 89% this year, to the lowest level in 6 years!

Baltic Dry Index Drops Below 1,000 for First Time in Six Years


Next week, US retailers will report Oct sales which are expected to be dreary. Now that earnings season is largely over & the banking crisis is somewhat muted, stock markets will start reacting to macro & company economic reports. Tough times for stocks may continue.