February is underway and it can't come soon enough after a battering in risk trades in January. Or can it?
We're coming off the second-worst month for the Nasdaq since inception but there's more bad news coming: February is the worst month of the year for the Nasdaq over the past two decades. The average decline is 1.27%.
If there's a silver lining it's that those declines were heavily weighted towards the early part of the millennium with the past 10 years providing a solidly positive return.
Here are some other trends:
1) Worst month for cable
Sterling tends to struggle everywhere you look in February but calling it the worst month is perhaps misleading. The average decline in cable is 0.73% over the past twenty years, that compares to -0.72% for May and 0.71% for August. That's as close as it gets. There have been declines in four of the past six years and the weakness bleeds into March as well.
2) Crude bulls get more good news
It's been a magical six-week run in oil and it's solidly positive already this week. The good news just keeps on coming for oil bears because February is the second-best month for oil. It's also the start of a great seasonal run that continues through June. Only five times in the last 20 years has crude fallen in February. In terms of FX, you would think that would be good for CAD but USD/CAD tends to rise in Feb on risk aversion.
3) Copper shines
Copper has been quiet lately as the doctor sorts through mixed signals on global growth. There's a nice seasonal stretch from January through April but February is the peak as it's the best month on the calendar for the metal. Last year it rallied 15% in February as part of a strong H1 rally. It's risen in 12 of the past 15 years.
4) Decent month for AUD
It's tough to say anything definitive about the Australian dollar with the RBA in the mixed but February is a decent month for AUD on a few fronts and it starts a nice run of seasonal strength in AUD/JPY that runs through April.
5) Shanghai surprise
It's been a miserable run for Chinese stocks but the lunar new year holiday period is traditionally good for the Shanghai Composite. It's the second best month for the index, averaging a 2.19% gain since 2000. Meanwhile, if you go all the way back to 1920, February is the second weakest month for the S&P 500.
