Scott Rubner: US Stocks Rally Now, But September Brings 'Autumn Hangover'
Astra Bro
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8-12Kevin English: You know, when you look at the stock market right now, it feels like two completely different realities are coexisting. On one hand, you've got Wall Street popping champagne, with the S&P 500 and Nasdaq hitting record highs, fueled by all the tech and AI excitement. They're basically hitting their year-end targets in the middle of summer.
Sarah: Right, it's a full-blown party for the big institutions. But then you look at the other side of the coin, the retail investors on forums and social media, and the mood is completely different. It's a mix of confusion, anxiety, and a serious fear of missing out. People are saying things like this rally makes no sense, and they're genuinely freaked out about a potential bubble.
Kevin English: Exactly. It's like that joke I saw, that the market is like a rabbit on Red Bull. It just can't sit still, even when the economic fundamentals don't seem to justify the sprint. It’s this tension that’s so fascinating.
Sarah: Well, into this paradox steps a figure some call the 'Wall Street Raven,' Scott Rubner. He's a former Goldman Sachs strategist, now at Citadel Securities, and he's got this reputation for nailing two major market pullbacks in the past. And his latest call is just dripping with drama.
Kevin English: Oh, this sounds good. What's the prediction?
Sarah: It's a two-parter, which is what makes it so compelling. First, he says, Don't rush for the exit yet – U.S. stocks can rally for at least one more month! But then he immediately follows it up with this ominous little whisper: and September might give you a surprise. It’s not just a forecast; it feels like a psychological script. He's basically telling everyone to enjoy the party now, but be ready to pay the bill later.
Kevin English: That 'enjoy now, pay later' line is really interesting. Given his track record, how does that kind of specific timing—one more month of fun, then a warning—play into the anxiety we're already seeing from individual investors?
Sarah: It amplifies it massively. It validates the feeling that something isn't right, but it also creates this intense pressure not to get left behind in the short term. It's the ultimate FOMO trap. You're being told the cliff is ahead, but also that there's still a little more road to race on.
Kevin English: But here's the question then: if he's so credible, why release a forecast that seems to encourage people to stay in a market that many already feel is overstretched? Is there a potential conflict of interest here, or another layer to his message we should be considering?
Sarah: That's the billion-dollar question. And it sets up this perfect mystery. It makes you wonder, what are the specific reasons he thinks this rally can keep going, even if only for a little while longer?
Kevin English: Okay, so he's not just making a vague prediction. He actually laid out four specific reasons for this 'rally fuel.' First, he points to historical seasonality, saying July is statistically the S&P 500's best month. Then there's a flood of corporate stock buybacks in August. Third, earnings expectations are set super low, and a weaker dollar is helping boost overseas revenue. And finally, he highlights low market volatility, with the VIX index staying below 15.
Sarah: You've laid out his argument perfectly. But what's fascinating is that every single one of those 'bullish' reasons, when you peel back the layers, reveals a potential warning sign. For instance, that historical seasonality? It's based on data going back almost a hundred years to 1928. It can become a self-fulfilling prophecy, but it's hardly a robust foundation in today's economy.
Kevin English: And the corporate buybacks? From a company's perspective, that seems like a smart way to return value to shareholders, right?
Sarah: On the surface, yes. But it could be a symptom of something worse. It might mean they have no better ideas for how to invest their cash for actual growth. Or even worse, they could be funding these buybacks with debt just to prop up the stock price. It's like drinking poison to quench your thirst. It feels good for a moment, but it's not sustainable.
Kevin English: I see. And the low earnings bar and weak dollar... that just sounds like accounting tricks.
Sarah: It's what you could call 'accounting sugar.' It makes the numbers look better on paper without any real improvement in the underlying business. You get this phenomenon where a company reports mediocre results, but because the expectation was so low, it's celebrated as a 'beat' and the stock jumps. It creates an illusion of health.
Kevin English: So that leaves the low volatility. Rubner apparently calls the VIX the market's 'star quarterback,' suggesting this calm is driving confidence. But you’ve mentioned before that low volatility can be the calm before the storm.
Sarah: Exactly. We saw eerily low VIX levels right before the COVID crash in early 2020, and again in the spring of 2008 before Lehman Brothers collapsed. But there's another layer here. Rubner's employer, Citadel Securities, is a massive market maker. They profit immensely from low volatility because it means steady, predictable business for them.
Kevin English: Ah, so when he calls low volatility the 'star quarterback,' how much of that is genuine market observation, and how much is subtle cheerleading for his own company's bottom line?
Sarah: It's impossible to say for sure, but it's a question every investor should be asking. It highlights that potential conflict of interest we talked about. If these 'rally fuels' are as superficial or problematic as they seem, what does that say about the quality of the current rally? Is it built on a solid foundation, or is it more of a house of cards?
Kevin English: It certainly seems like while Rubner's bullish case provides a compelling short-term story, digging in reveals some pretty significant weaknesses. This brings us to the other side of his prediction: the 'September surprise' and the potential for a serious 'autumn hangover.'
Sarah: Right. And beyond just the historical fact that September is the worst month for stocks, with crashes like 1929 and 2008 clustering around it, Rubner is pointing to something more immediate. He's worried about what he calls a 'support vacuum' forming.
Kevin English: A 'support vacuum.' What does that mean?
Sarah: Think about the three main pillars that have been holding the market up. First, corporate buybacks, which are huge in August, slow down significantly in September. Second, retail investor enthusiasm, which has been a major force, tends to fade sharply as summer ends. And third, the big systematic funds—the quants and algorithm-driven funds—they've been buying aggressively all year, but now they're at or near their maximum allocation. They're 'maxed out.'
Kevin English: So if I'm hearing you right, these three major sources of buying power—corporations, retail investors, and quant funds—are all expected to pull back at the same time?
Sarah: Precisely. It’s like the music suddenly stopping in a game of musical chairs, and you realize there aren't enough chairs for everyone. When those key pillars of buying support weaken simultaneously, the market becomes incredibly vulnerable to any kind of shock or bad news.
Kevin English: Can you give me an analogy for what that 'support vacuum' would actually feel like in the market? What's the market equivalent of 'not enough chairs'?
Sarah: It's like a Jenga tower. All summer, these buyers have been carefully adding blocks, making the tower taller and taller. But in September, not only do they stop adding blocks, but they might start pulling their own blocks out. Any small wobble, any piece of bad news that would normally be absorbed, could suddenly cause the whole structure to become unstable and crash down.
Kevin English: That's a powerful image. So, Rubner's advice is to buy cheap put options now as a form of protection. And while that's standard hedging advice, is there a cynical read here that this also happens to drive business directly to Citadel's options trading desk?
Sarah: It's the same pattern we've been discussing. The advice is sound on its own, but you can't ignore the context. It once again highlights the dual nature of 'expert' advice in financial markets. You have to listen critically.
Kevin English: So with all this complexity—the mixed signals, Rubner's dual forecast, this potential 'autumn hangover'—what is the average investor supposed to do? You're caught between the fear of missing out and the fear of a crash.
Sarah: It really is a tough spot. The core principle has to be prudent risk management and critical thinking. It means not blindly chasing hype stocks at all-time highs. It means scrutinizing those corporate buybacks—is it real value or just debt-fueled window dressing? And most importantly, it means being wary of guru predictions. Even a credible strategist like Rubner might be, to some degree, 'talking his book' because of his firm's interests.
Kevin English: You mentioned 'talking their book.' If we put ourselves in the shoes of a huge market maker like Citadel, how does subtly influencing market sentiment directly benefit their operations?
Sarah: Well, for a market maker, predictability is profit. If you can create a narrative—say, 'calm now, chaos later'—it can drive specific behaviors. It encourages trading in the short term, and then it drives demand for hedging products like options, which is a massive part of their business. They benefit from the volume of transactions, whether the market goes up or down. For retail investors, the lesson is that you have to understand the incentives of the person giving the advice.
Kevin English: You also mentioned the idea of 'missing the last slice of profit.' Can you explain why it's better to 'leave the party early' than to stay too long?
Sarah: Absolutely. Think of it this way: missing the last 10% of a rally might sting your ego a little. But getting caught in the first 20% of a crash can wipe out your capital. The cost of being the last one to exit is infinitely higher than the cost of missing a little bit of extra upside. It's about preserving your ability to invest another day. Greed makes you stay for that last slice, but prudence tells you to leave the party while you're still having a good time, not after the lights come on and you're left with the mess.
Kevin English: That really puts it into perspective. It seems navigating today's market is less about predicting the future and more about managing risk and understanding human behavior.
Sarah: I think that's the perfect way to frame it. The current U.S. stock rally feels much more like a liquidity-fueled feast than something built on stellar economics or earnings. And we're seeing this paradox play out where institutional players are celebrating, while many individual investors are feeling deep anxiety.
Kevin English: And the market faces a huge vulnerability with this projected 'support vacuum,' where the key buyers—corporations, retail, and systematic funds—are all expected to recede at the same time. This could easily amplify any negative shocks come the fall.
Sarah: Which is why prudence beats prediction every time. In this environment, the most critical thing for an investor isn't to follow a guru's forecast, but to manage their own risk, question the narratives, and be willing to leave the party early rather than risk a severe autumn hangover.
Kevin English: This market cycle serves as a potent reminder that financial markets are not merely reflections of economic data, but complex ecosystems shaped by collective psychology, institutional interests, and the often-deceptive allure of short-term gains. The true challenge for investors lies not in predicting the precise moment the music stops, but in cultivating the discipline to participate without greed, to question narratives, and to always prioritize the long-term sustainability of their capital over the fleeting thrill of the final dance. In a world of constant change and uncertainty, the ultimate wisdom lies in adapting, not in clinging to the illusion of control.