Economic Update – Waiting for Saint Legers Day

It’s common saying in the norther hemisphere, “sell in May and stay away until St Legers Day”.  St Legers Day is one of the five Classic races staged in Britain, the St Leger is the oldest. First run back in 1776, four years before the Epsom Derby, the St Leger boasts a long and storied history, along with a glittering roll of honour. When Anthony St Leger first devised the race, it was run over a two-mile trip at Doncaster and named “A Sweepstake Of 25 Guineas”. The following season, the race was renamed the “St Leger” and, in 1813, the length of the contest was reduced to its current distance of 1m 6½f. This year St Legers Day is on September 17th, about the end of the northern hemisphere summer holidays.

To-date, the saying has not rung true as international markets like the NASDAQ have continued their rally. However, in late July and early August we started to see an unwinding of the terrific run for what has now become known as the ‘magnificent seven’.  The most notable news was rating agency Fitch’s downgrading of US Government debt from AAA to AA+. This was not necessarily what caused the NASDAQ to turn negative, a stronger than expected jobs report pointing to continued strength in the US economy lends itself to higher interest rates, and the US Fed has increased bond sales (quantitative tightening).

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