Tags: stock | market

Pfeil: October Market Crash Likely

Thursday, 09 Jul 2009 08:11 AM

By Julie Crawshaw

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Global stock markets could crash in October, said economist and investor Enzio von Pfeil, CEO of EconomicClock.com.

The primary reason for the crash will be that proprietary trading desks will decide to go short because the economic recovery will still be missing in action.

"People will finally accept that the unemployment rates will have to keep rising, that productivity will have to keep falling," Pfeil told CNBC.

“That in turn will make earnings expectations fall through the floor," with Western markets more affected than those in Asia, he said.

The big proprietary trading desks have been making money on a bull run, Pfeil said, but adds that "the only thing that is going to be out there is to have major, major short positions.”

The market has a reputation for tanking in October, though there's no obvious reason why that month should stand out as being so bloody, said Joe Weisenthal at Clusterstock.

Even more worrisome than that, Weisenthal said, is the eerie resemblance the 2009 market has to the 2008 market during the first half of both years.

“Obviously … the second halves of each year might be totally different,” Weisenthal said.

“But there does seem to be a lot of chatter about how we'll ride out a quiet summer, and that when we start focusing again in September/October,’’ he said. “We'll see just how ugly all this bad housing/credit card/unemployment news really is.”

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