A couple of interesting charts from SocGen on how 2011 is stacking up compared to other horrible years in the market.
Their observation? For the most part, stocks have been far weaker this year than in past years at this point, and so we’re more likely to get a strong Q4 rally.
These two charts — Treasuries and equities in those four years — are interesting.
Obviously 2008 is the closest parallel in equities, to which SocGen says:
For equity markets, we can draw some comparisons with 2008 as we have seen market weakness over the first 9 months of the year. However, governments and central banks now have a clearer idea of what could happen if markets crash and also have tools available to prevent a complete market collapse. They are still working on plans to save the eurozone and EFSF2 should be in place before year-end. On top of that, equity markets are much weaker now than in Oct. 1929 and 1987, (and this is particularly true for the eurozone which continues to suffer from a glaring lack of economic union). Hence our bear market rally scenario for Q4 2011.