The "curse" of September is unstoppable! Goldman Sachs fund flow experts turn bearish on US stocks starting September 16th

The "curse" of September's decline seems unstoppable, accurately predicting the summer stock market pullback, Goldman Sachs research fund flow expert Scott Rubner has shifted.In a report released on Wednesday, September 4th, Eastern Time, Rubner, Managing Director of Goldman Sachs Global Markets Division, clearly stated at the beginning: "I am bearish on the U.S. stock market starting from September 16th." The report stated that on the first trading day of September in the U.S. this week, market participants were observed to be trading in anticipation of a bearish view."We see that clients are acting faster before the market's technicals turn negative, rather than waiting until mid-month to take action. If the (U.S. non-farm) employment data is weak this Friday, a market adjustment may begin. In the past 48 hours, I have received more inquiries about technical market updates than I have received all year."Rubner stated that he has been tracking fund flows for over 20 years, and after the market turmoil on "Black Monday" on August 5th this year, trading styles have changed more rapidly. The most common question investors ask is: why has September historically been a weak month for global stocks and risk assets?Rubner's report traced past data and found that the second half of September is the worst performing period for the S&P 500 index in a year. The report pointed out that since 1928, nearly a hundred years, in the last 11 trading days of September, the median return of the S&P has been negative for ten days. Fund flows can explain why September becomes a weak month in a year.The report shows that in the past four years, from 2020 to 2023, the S&P has dropped by at least nearly 4% in September, with drops of 4.87%, 9.34%, 4.76%, and 3.92% respectively. The Nasdaq 100 index has also dropped by at least 5%, with drops of 5.07%, 10.6%, 5.73%, and 5.72%. Rubner believes that this historical performance may remind investors to hedge during the back-to-school season in September.The report pointed out that as September begins, the systemic holding period of U.S. stocks has returned to normal, companies are entering a silent period where buybacks are not allowed, pension funds have ample supply at the end of the quarter, and mutual funds are making some important adjustments at the end of this fiscal year. The VAR of U.S. stocks in September exceeds that of the past six U.S. election cycles. In addition, after the U.S. Labor Day, a paper feast is coming - on Tuesday this week, U.S. stock supply reached $32 billion, high-grade bond supply reached $43 billion, the third largest single-day volume in history, and Goldman Sachs' trading desk remains active.Regarding buybacks, the report mentioned that August and September are the two strongest months for buybacks in a year. Since the beginning of this year, the authorized amount for buybacks by companies has reached a record $893 billion. Publicly listed companies are already the largest buyers in the U.S. stock market. Goldman Sachs estimates that the recent quiet period for buybacks started on September 13th, and half of the companies will not be able to buy back shares. Goldman Sachs expects that during the quiet period, the demand for buybacks will decrease by 35%, reaching the peak of buybacks for companies entering the buyback window this weekRegarding pension funds, the report mentioned that before entering September, the fund flow in the US stock market had exceeded that of the previous five election cycles. The Milliman 100 Pension Fund Index shows a funding ratio of 103% for pension funds. Rubner stated that pension funds have been shifting towards investment-grade credit bonds, reducing equity risk, and using immunization strategies to lower liability risk. Due to ample funds, pension funds have been reducing equity risk in the US before the presidential election.As for mutual funds, the report stated that a total of 554 large mutual funds with $3.7 trillion in stock assets analyzed by Goldman Sachs Research found that October of this year is the last month of the fiscal year for most mutual funds. Funds in October account for nearly 22% of the total actively managed assets, followed by December at around 20%. October, being the end of the fiscal year, may have a negative impact on the price trends of popular mutual funds, as poorly performing funds since the beginning of the year may be sold off due to tax losses, while well-performing funds may reduce holdings or take profits.In conclusion, Rubner's basic view is that the weakness in the US stock market in September has already been traded by traders in advance, and the November US presidential election will become a liquidation event for risk assets