BBG highlights that August is worst month for Global Stocks over past decade.

BBG Reporter Cormac Mullen highlights that August is worst month for Global Stocks over past decade.

It's the first trading day of August and that means seasonality season has officially started. The month has traditionally been a poor one for risk assets -- the worst over the last decade for global stocks -- with the MSCI AC World Index declining on average about 1.2%. Many market commentators don't have much time for seasonality arguments; academic studies tend to show that any recurring relationship that might have once existed has long been arbitraged away. And August's is a tougher one to argue as it doesn't have a tax deadline or quarter-end in it that could lend weight to why markets would regularly sell off -- outside of low summer liquidity of course. A look at weak Augusts over the past ten years reminds me of Homer Simpson's summary of a memorable series of events as "just a bunch of stuff that happened." The surprise Chinese yuan devaluation of 2015 and European sovereign debt crisis in 2011 that helped push global shares down over 7% those months were not linked to the month of August beyond coincidence. And while we almost had a great parallel from Fitch's warning on the U.S. debt outlook -- Standard & Poor's famously cut its AAA rating in August 2011 -- the Fitch downgrade came out July 31. But traders will still have "August is a weak month" somewhere in the back of their minds and that could make it easier to push the sell button on any negative news that breaks.

Cormac Mullen is a cross-asset reporter and editor for Bloomberg News in Tokyo