2986: September: The Worst Month For The Markets But Is It An Opportunity?
The SharePickers Podcast with Justin WaiteShow Notes
In this episode of Macro, Micro and Small Cap News, we examine historical September market weakness alongside a convergence of macroeconomic headwinds—from spiking sovereign bond yields to persistent inflation pressures and the spector of stagflation. We also look at Vanguard’s ultra-low-cost global ETF launch and dive into the operational turnaround at UK small-cap lender Funding Circle ahead of its interim results. Vanguard’s Disruptive Launch:
Vanguard FTSE Global All-Cap UCITS ETF (VALL): Offering exposure to ~10,100 stocks across 48 markets with an Ongoing Charges Figure (OCF) of just 0.07%—less than a third of the classic index fund’s 0.23%. Assets under management have surged from under $50m at launch to $645m in just two weeks.
A Macro Story: 3 Reasons the Markets Are Bearish:
1. September Seasonality & The Correlation Trap:
The S&P 500 averages -1.1% in September with a win rate of only ~45% since 1928, marked by asymmetric tail-risk downside.
High long-term correlation between the S&P 500 and UK indices (+0.60 to +0.80 with the FTSE 100; +0.50 to +0.70 with the FTSE 250) means US turbulence spills directly into UK portfolios.
2. The Sovereign Bond Sell-Off & Collapsing Equity Risk Premium:
Benchmark 10-year yields across the US, UK, and Europe sit near pre-2008 highs, driven by heavy debt issuance, quantitative tightening, and revived term premiums.
Higher risk-free rates pull capital from equities into fixed income and compress the Equity Risk Premium below 100 bps.
3. Sticky Inflation & The Stagflation Dilemma:
Persistent services inflation and European natural gas spikes limit central banks’ flexibility.
If rising yields curb growth while inflation holds firm, markets face a stagflation bind—exposing an economy where AI capex has generated roughly three-quarters of early 2026 US GDP growth.
Company Worth Researching:
Funding Circle (LSE: FCH):
Strong HY 2026 trading update ahead of full interims on September 8: revenue up 50% to ~£138m, profit before tax surging to ~£23m, and an unrestricted cash balance of £136m.
High cash generation from the core Term Loans segment funding rapid 71% transaction growth in FlexiPay and Card, alongside ongoing capital returns via a £25m share buyback program.
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