Nevill Boyd Maunsell: A quiet August? Don't bet on it!
August used to be the month when nothing happened – except that the First World War broke out in August 1914 and the Second World War became inevitable in August 1939.
Last August we had that nasty Georgia war that could have turned into something much worse.
But in the non-violent arena of finance, industry and commerce, surely August is time-out. The big hitters are away.
Well, I was on holiday in August 1992 when the pound’s position in the Exchange Rate Mechanism became untenable and again in August 2007 when stock markets round the world panicked at what was happening with American sub-prime mortgages.
When the big hitters returned, they concluded that it was a false alarm, even, later that winter, that Northern Rock was a one-off and that the Bear Stearns affair on Wall Street just showed that the Fed had strong nerves and big biceps.
It took more than a year before the great Lehman Brothers disaster revealed how sub-prime mortgages and unknown computer-fuls of worthless securities based on them had poisoned the banking system.
Yet August was the month when the symptoms erupted.
There was a time when you might expect nothing much to happen in August. Companies with January year-ends, the majority, produced their half-time numbers in September. Accountants poring over ledgers needed a couple of months from the end of June to add up the columns.
No longer. Computers put a stop to all that. Nowadays August is the month when the interim results roll in, starting with banks and insurance companies this week. In America they go even faster, with a slew of second-quarter results in July.
That is a reason for taking the latest surge on the stock market more seriously than one might. The market had blazed into life back in March amid the talk of green shoots and a sense that the gloom had been overdone last winter. But shares then took a breather in June and early July.
The second leg of this rally coincided with a slew of US company results, mostly less bad than had been feared.
The American economy, too, turned out to have shrunk much less in the second quarter than most pundits had predicted.
On top of that, the Chinese were having no recession at all. They really had “decoupled” from the troubled West.
In the next couple of weeks we shall see how real, non-bank, British companies, have been doing. We can do with some pleasant surprises. Don’t despair. We have already had one, at Rolls-Royce.