Market outlook: The correction has started
The benchmark index tumbled 6.7 percent to 2,667.75, capping its biggest monthly loss since October. The gauge has slumped 23 percent from its 15-month high on Aug. 4 and is the worst performer this month among 89 benchmark indexes tracked by Bloomberg globally. Trading in Europe is down this morning before our market opens and the pre-market indicators all point to a lower opening.
This is the last day of August and September usually starts the most volatile 2 months of the year, capped by Options expiration for the third Friday in October.
I just returned form a short trip to Las Vegas for the weekend. It is very slow there. Not many tourists seemed to be visiting as I observed the lightest traffic since I have gone to Vegas now the past 10 years. The Casino's had many gaming tables closed because there were no players. In Bellagio's, for example, over half of the Craps Tables were closed on Friday. Normally crowded walkways were sparse and auto traffic was unbelievably light. I saw no construction going on to finish the City Center project, as well as a number of other buildings incomplete. I talked to one cab driver who said he had bought a house a few years ago for $260,000 and Citi Bank wanted him to take more money and so he took a total of $300,000. Well since the sub-prime MORTGAGE problem, his house is now worth only $42,000. He said he is going to sell the house for the $42,000 and move away to Peru as he is part Japanese and Peruvian. He claims he can live in Peru for only $20/day. He said the only thing Las Vegas leads the country in is Tattoo Parlors and Prostitutes.
Another cab driver talked about how Kirkorian will go bankrupt because he is charging almost $1,000/sq. ft. for his newly built apartments. He said everyone in Vegas sees him as a greedy person who deserves bankruptcy. And yet another cab driver was bitter as he complained many Conventions had cancelled coming to Vegas since President Obama had chastised business leaders for taking extravagant trips to Vegas while normal people were hurting. So it is clear to me it is going to be a long time before Las Vegas optimism returns to the population there and most likely the country as well. This Fall correction isn't going to help confidence much either.