September is generally a bad month for the markets. It started off very badly on Tuesday. There are incredible declines in the indexes. The decline in Nasdaq was 3.26%, Russell 2000 was 3.09%, S&P 500 was 2.12%, Dow Jones was 1.51%. Bitcoin resisted for a while and was standing at 59,000. In fact, I was happy that it was standing despite all this noise. It has now retreated to 56,500. So what's going on? What data came on Tuesday that caused all this chaos? What will happen in the coming days?

First, let's look at the data that came on Tuesday. ISM Manufacturing was the most important data on Tuesday and it came at 47.2. I was hoping it would be higher than the previous month, slightly below market expectations. It actually came higher, but it was slightly below economists' expectations. The market read this negatively, but the main negative thing was the decrease in new orders. I was expecting some growth in New Manufacturing Orders. Unfortunately, that did not happen, a very bad result came there. The market was afraid of this. Also, in companies with increased inventory, when the two are combined, companies accumulate inventory but cannot sell it, and this is a sign of recession, and a lot of fear was instilled in the market.

On the other hand, there is a slight increase in employment, from 43.4 to 46, this is pleasing. Because I think the most important issue is employment in America right now. I was very focused on inflation before. Now, the only place we need to focus on is employment data, which is pleasing in that respect. However, the market was already in decline before this data was published. It is also useful to remember this. Then came the Atlanta FED's Gross National Product estimate. There was a 2.5% estimate. I found 2.5 to be overly optimistic. In fact, they lowered it to 2% and revised the expectation. So, is it normal for the stock market to fall this much in the face of this data?

First of all, it is not new for the manufacturing PMI to be low in the United States. It has been below fifty for a long time and it keeps fluctuating. Yes, it is true that it is at bad levels, that is, somewhere close to recession levels, but it has been here for a long time and there was no surprise in Tuesday's data. New orders are a little lower than expected, but the total number is slightly above last month, meaning there is a slight upward break. If the market wanted to, it would have welcomed this, but more importantly, the United States is not a manufacturing economy. America is a service economy, and although America has had problems on the manufacturing side for a long time, the PMI has been below 50 since 2022.

Gross national product continues to grow. There was growth of nearly 3% in the last quarter. Because there is no problem on the services side. So, yes, Tuesday's data is a negative data when we look at it like this, but the share of manufacturing in America's total economic structure is below 10%. What is really important is the services PMI that will come on Thursday. It is useful to hold above 50 there and I think all the big players in the stock market know this. I think that was not the reason for Tuesday's decline. So what else could it be? For example, it could be the news from China. Things are not going well in China on the production side either. The production PMI has been below 50 for a long time there. It also emerged as 49.1 in August. New orders are 48.9, employment is 48.1, output is 49. 8 and unlike America, there is a slight downward bend here.

In other words, the total in America has slightly bent upwards, albeit very small. However, there is also a downward break in China. So is this a problem? Of course it is. Because the Chinese PMI going down means that Chinese companies will sell goods even cheaper in order to be competitive. This is positive in terms of inflation, but we do not have an inflation problem anyway. But it is a troublesome amount for American manufacturing companies. Because competitiveness is becoming more difficult. This may have affected the market a little. On the other hand, the services PMI was also published in China. It reached 50.3 there. It was 50.2 the previous month. There is also another measurement they call CAIXAN PMI, it also shows an improvement in August, around 50.4. In contrast to 49.8 in the previous period, July.

So yes, the Chinese economy is weak, there is a downward curvature on the production side, but there is no death. So these cannot be the explanations for Tuesday's historic decline. Here we are going to the Japanese carry trade issue. On Tuesday, the head of the Bank of Japan said that if necessary, we will raise interest rates. The reason for the interest rate increase is of course inflation. The trigger for inflation in Japan is oil. Oil prices are going down. In other words, I would not be surprised if we see $50 this year, it has even gone below $70. So when I look at the details there, I do not see anything serious. Yes, the US dollar fell a little against the Japanese yen on Tuesday. The Japanese stock market has fallen quite sharply, they fell by nearly 4.5%. These will negatively affect the American stock market today. But it is difficult to know whether there has really been a dissolution on the carry trade side, whether there were carry trade sales on Tuesday in America.

We can look at it this way, maybe the volatility index jumped to 20s on Tuesday. It had gone to 60s in the previous carry trade sale. Based on that, I think that maybe carry trade is not the issue, our main issue. It is difficult to be sure of this, unfortunately. Because we do not have any concrete data on how much carry trade there is, that is, how much stock people who took cheap loans from Japan bought from America and how much of it from Nvidia. But the issue on Tuesday may not be carry trade. Because as a result, interest rates did not increase in Japan. Only the Central Bank said in a report it presented that it could increase if necessary, and a Central Bank governor should say these things anyway.

So what is my conclusion when we look at all these? We will understand why the decline occurred so that we can understand where the return is. I think the reason for the decline is preparation for the black swan. What does Black Swan mean? An unexpected, big event that will collapse the market and there is a lot of news flow ahead of us that can trigger such an event, to be honest. Here is the very important employment data coming on Friday. For example, imagine unemployment in America jumping from 4.3% to 4.5%. It could be a subject that will really crash the markets. Will the FED's interest rate decision be 25 basis points, 50, 75, what will it announce? It is an issue that will greatly affect the markets in any case. The Harris-Trump debate on September 10 will greatly affect the markets. Because on that day, people will see who will win the election and which American companies will benefit from the economic policies of the people who will win and which will not. That is why it is a critical issue and of course the most important one is November 5. After all, the elections are taking place on November 5 and uncertainties always increase towards the elections.

Apart from these events, there is the Japanese carry trade issue. We are seeing China's deterioration together. People are afraid that something will explode somewhere. Now you will say to me, they are not afraid on the last day of August, but are they afraid today? If you remember, the managers of investment funds returned from vacation and when they started working, I think the first thing they wanted to do was the first instruction they received from their superiors; buy some, go into cash, let's be prepared for possible fluctuations in the upcoming period. I don't know if the decline is over, it's very difficult to know right now. I made small purchases yesterday, especially from Nvidia. I find Nvidia's decline completely meaningless, but I could be wrong, of course it's not investment advice. I started small purchases there.

However, we can say with 100% certainty that the upcoming period, that is, until the elections on November 5, will be volatile. Although hedges protected some of the losses, they certainly did not protect all of them. Maybe the FED will say, I don't know, I'm not lowering interest rates, or it will lower them by 100 points all of a sudden and panic the markets or there will be great uncertainty about the elections. The ballot boxes will be locked again, it's happened before, you know. We can't reach a conclusion. In other words, there is a lot of uncertainty in the upcoming period. But despite all this, my view is that the next year will be positive. Because no matter what happens, money will become abundant, that is, no matter what we do, no matter how the FED makes 50 basis points or 100 basis points cuts, they will eventually make money abundant. The abundance of money also benefits asset prices. But this is my one-year perspective. I think the cycle will develop this way. But I don't know what will happen in the coming days, in the coming weeks.

My intention is to put a little more cash into the system during declines. But I will continue slowly, without rushing, with small purchases. I don't plan on selling my main positions either. Of course, there are positions where I have stop losses. I don't want to suffer losses in any stock, especially in my medium-term portfolio, over 7%. It's not that much of a problem in the long term, I can make some cuts there. Because after all, protecting our capital is very important. But I think there will be good days to add to my long-term portfolio, and great opportunities may arise. The market will be very volatile. In these fluctuations, one day we will feel like hell, one day we will feel like kings. But the volatility will continue, and I think there's one thing we should all focus on amidst all the noise.

The reason I have made a lot of profit in the stock markets since October 2022 was to focus on a single data, namely inflation. I was the person who claimed that inflation would fall rapidly, even before many economists. In fact, I have been claiming for 3-4 months that America does not have an inflation problem, but a deflation problem. There were such fluctuations at the beginning of this year. Apart from that, the trend I mentioned has come true and this was the main issue. Now, the main issue is employment, we need to analyze all employment-related data in great detail in the coming days. These manufacturing PMIs, services PMIs, although they are also important, are basically noise. Whether there is a deterioration in employment is the most important issue. Because if there is a deterioration in employment, that is, if people become unemployed, a recession is inevitable. In fact, there may be even harsher things. Because people do not have income. When we look at the American consumer, they continue to consume but are more indebted. They pay their credit card debts later.

The increase in their income cannot cope with inflation. That is why they have to take on extra debt. So there is a problem there and what the FED will do on the interest side may not make a positive contribution to this immediately. There is also a deflation problem in America. This issue may intensify in the coming days. Therefore, I think it is quite possible that a lot of bad news will flow and the stock markets will go up and down. This is an opportunity for me to build my long-term portfolio. In short-medium term portfolios, it is a period of managing risks and you should make this distinction. If there is a company you really like and the shares of that company you really like are getting cheaper unnecessarily, buy some of it. But do not look at it in the short-term.

It is useful to state clearly that those who do not look at it in the long term cannot sleep well at night. In fact, I had a restless night on Tuesday because my short and medium term portfolios were a little bigger than they should be. Do not fall into this trap. I hope that nothing will happen from a one-day decline, we have many years ahead of us. It is important that we do not melt our capital, I plan to continue adding to positions in the long term. In the short-medium term, I will manage the risk a little more. There may be small sales. There may be stop losses.

The information, comments and recommendations contained herein are not within the scope of investment consultancy. Investment consultancy services are provided within the framework of the investment consultancy agreement to be signed between brokerage firms, portfolio management companies, banks that do not accept deposits and customers. The comments in this article are only my personal comments and these comments may not be appropriate for your financial situation and risk return. For this reason, investments should not be made based on the information and comments in my articles.