October is traditionally a scary month for equities. One-fourth of all equity crashes (including the big ones in 1929 and 1987) have happened in October. Last month, Federal Reserve bank Chairman Ben Bernanke delivered QEternity (open ended Quantitative easing of $40bn bond purchases per month) and now we are faced with a ‘fiscal cliff’. If the history of this Congress is any guidance, bickering aside, at the eleventh hour, the ‘fiscal cliff’ will be averted. US Manufacturing data released this Monday by the ISM (Institute of Supply Management) bucked the trend by rising to 51.5 from 49.6 previously. This snaps a string of three consecutive sub-50 readings. The details behind the headline were also better than expected, as new orders and employment both rose. I maintain my positive view on equities over bonds. The weakness we have seen towards the end of September will be bought back and most certainly in the rally that will ensue when Spain asks for a bailout and the OMT is activated. Recently, when President Obama was asked about his biggest mistake, he said it was ‘messaging’, not, ‘policy’. If policy prescription is right, big economic declines are followed by a big economic recovery. The recovery that followed during January 1983 – December 1985 resulted in a cumulative GDP growth of +18.95%; this time around, in the period from July 2009 – June 2012 cumulative GDP growth was a subdued +6.75%.