Why fear is spreading in financial markets

According to t. s. Eliotsp, April is the cruellest month. Shareholders would disagree. For them, it is September. The rest of the year stocks tend to rise more often than not. Since 1928, the ratio of monthly gains to losses in America’s & 500 index, excluding September, has been about 60/40. But the autumn chill seems to do something to the market’s psyche. In September the index has dropped 55% of the time. True to form, after a jittery August it has spent recent weeks falling.Such a calendar effect flies in the face of the idea that financial markets are efficient. After all, asset prices ought only to move in response to new information (future cash flows, for instance). Predictable fluctuations should be identified, exploited and arbitraged away by traders. Yet this September there is no mystery about what is going on: investors have learned, or rather accepted, something new. High interest rates are here for the long haul.