Ready for some spooktacular market terms to get you in the mood for Halloween? You’re in the right place! Check out our list of freaky terms, before getting the lowdown on this week’s fundamental events. Grab your broomstick and your pumpkin-spice latte and let’s go!
#1 Black Swan Events
Kicking things off with something truly terrifying. Black Swan events are extremely rare, happen out of the blue and cause a monumental mess. The most horrific thing about these events is that they are impossible to predict, yet, in hindsight, often seem very obvious.
World War I is often highlighted as a Black Swan event. No one initially thought it would ever happen, and when the conflict did start, everyone assumed it would be over in a matter of weeks. Of course, the war proceeded to drag on for 4 years, inflicted 40 million deaths and the total destruction of the global economy.
In hindsight, the empire building, general great power rivalries and crippling alliances that preceded World War I made this conflict a pretty obvious thing.
#2 Cockroach Theory
Continuing the animal theme. The Cockroach theory stipulates that when bad news hits the public eye it’s usually only half the story. There’s actually more bad news waiting in the wings that will come out eventually, making things much worse. Just like when you see one cockroach, there are certainly plenty more scurrying around. Talk about pessimism!
#3 Zombie Stocks
Zombie stocks are stocks in dead or insolvent companies that are near or already in bankruptcy. These companies are usually unable to make interest payments from their Ebitda (earnings before interest, taxes, depreciation, and amortisation), for an extended period of time.
AKA, every stock trader’s nightmare!
#4 The Misery Index
Another nasty one. The so-called Misery Index is what you get when you combine a country’s unemployment rate with its inflation rate. It’s used to determine how the average citizen is doing economically. The theory goes that higher unemployment and rising inflation make the economic cost of living more difficult and, well, miserable!
Top 10 countries with the highest Misery Index, 2020
#5 A Quadruple Witching
Keep your wits about you on the third Friday of March, June, September and December, or “Freaky Friday” as they’ve become known.
On these particular Fridays, four (quad) different investment types (stock options, stock index options, single stock futures and stock index futures) all expire at the same time. This simultaneous expiration has the potential to cause massive volatility in the markets.
#6 Dead Cat Bounce
More animals! (We’re not making these up. Honestly!) A dead cat bounce is a brief recovery in the price of a declining stock. The name comes from the idea that “even a dead cat will bounce if it falls from a great height”. (Don’t try this theory, please!)
Our final hit on the list is a situation that every country on the planet is truly petrified of. Stagflation is the ultimate perfect storm, where slow economic growth combines with high unemployment and high inflation. It’s endgame territory, as far as governments are concerned.
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If these 7 terms weren’t quite enough to give you goosebumps and you have some other equally freaky market terms, let us know by tweeting us at @_contentworks.
No major events are scheduled.
● AUD — RBA Interest Rate Decision
● CAD — Balance of Trade (AUG)
● NZD — Interest Rate Decision
● EUR — ECB Monetary Policy Meeting Accounts
● Employment Change (SEP); Unemployment Rate (SEP)
● USD — Non Farm Payrolls (SEP); Unemployment Rate (SEP)
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The Contentworks team