FAST FIVE: Goldman Sachs Has Just Issued An Ominous Warning About Stock Market Chaos In October
Goldman derivatives strategist John Marshall is the man behind this new warning, and he believes that there are some fundamental reasons why the month of October is often so volatile- “We believe high October volatility is more than just a coincidence,” John Marshall, equity derivatives strategist at Goldman, said in a note Friday.
For example, the Federal Reserve had not intervened in the repo market since 2008, but this week the liquidity crunch was so bad that the Fed felt forced to conduct emergency overnight repurchase agreement operations on Tuesday, Wednesday, Thursday and Friday.
But if all this is no big deal, why haven't they had to conduct such emergency interventions for the last 11 years.
At the same time, the public is evenly divided over the likelihood of a recession in the next year. The current expectation of a recession is nine points higher than it was in October 2007, just two months before the Great Recession began but slightly below a February 2001 reading, one month before that eight-month-long recession.
Over the past few months, my wife and I have felt a sense of urgency unlike anything that we have ever felt before. You may have noticed a difference in our tone and in the types of stories that we have been sharing. Everything that we have been doing has been leading up to this. The time of “the perfect storm” is here, and most Americans won't understand what is happening.