Collapse remembered

TORONTO — Investors will be looking backwards to go forward this week on the stock markets, as they mark the one-year anniversary of the collapse of Lehman Brothers, which signalled the start of the rapid economic downturn.

Elizabeth Rose

TORONTO — Investors will be looking backwards to go forward this week on the stock markets, as they mark the one-year anniversary of the collapse of Lehman Brothers, which signalled the start of the rapid economic downturn.

And while many might still be nursing their wounds, a reflection on the past could inspire further optimism.

“It could’ve turned out much worse, especially when you look at where we were in December and January,” suggested Doug Porter, deputy chief economist at BMO Nesbitt Burns.

“Investors are just becoming more convinced that the global economy is recovering faster than anyone could have believed possible.”

It has been a volatile trek for the markets since Lehman’s filing on Sept. 15, 2008, but Porter suggested that investors have been pushing forward and becoming “increasingly emboldened,” so much so that he thinks they might buck the usual fall trend of market pessimism.

“That seasonal factor is really not going to come into play this year,” he said.

“Typically one of the reasons why the market faces pressure in September… (is because) investors and portfolio managers take a serious look at next year’s prospects and often those prospects are downgraded.”

Porter said this year economic and earnings forecasts will more likely be upgraded for 2010 instead of scaled back.

CIBC World Markets economist Meny Grauman said the week will provide investors with further confirmation that the end of the summer also marked an end to the recession.

This week, inflation numbers on both sides of the border are expected to be a key motivator for economic reassurance.

“We are lighter than consensus on our call for August retail sales, but it is clear that the success of the ’cash-for-clunkers’ program still gave spending a nice temporary lift,” Grauman wrote in a note about the expectation for U.S. results.

“Year-over-year CPI should remain negative, but is starting to head higher again as we pass the anniversary of high oil, while core inflation remains stable.”

Last week, Toronto’s S&P/TSX composite index ended Friday ahead 236 points for the week at 11,253.23.

Wall Street launched its own climb with the Dow Jones pulling off its best week in a month to close Friday at 9,605.41.

Friday also brought the eighth anniversary of the 9/11 terror attacks and reflection on Wall Street also served a reminder of how little progress the stock market has made since then because of the steep slide that began two years ago.

On Sept. 10, 2001, the Dow ended at 9,605.51.

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