BOJ Governor Kuroda

Yesterday I offered up the October seasonal scorecard but we're now into November and it's time to look forward. Here are some historical patterns to help shape your thinking, based on the last 20 years.

  • Best month for USD/JPY -- weak yen in general
  • Third-best month for the US dollar
  • The November through February period for gold is the strongest time of year
  • Second-best month for the MSCI world index
  • Second-best month for the German DAX
  • Best month for the Nasdaq
  • Best month for the Nikkei 225
  • Second-best month for the S&P 500
  • The final month of the seasonal slump for oil. Seasonals neutral in Dec-Jan then strongly positve from Feb-June

So it's a strong month for stocks and that's doubly true in years with a mid-term election in the US. Obviously, the Federal Reserve decision tomorrow will set the tone and that will overshadow the seasonals but if the decision is benign, look for the seasonals to creep in.

The main trend though is yen weakness. The Japanese currency is weak across the board in November and that's going to test the Ministry of Finance. A silver lining may be that the reaction function of the market is now changed compared to most of the past two decades when a weak yen reflected a strong risk trade.