We’re in the middle of an interesting moment for the markets, where short-term volatility and uncertainty might lead you to believe that the economy is faltering. After all, the major stock indexes lost ground last week, with the S&P 500 losing 1.94%, the Dow dropping 1.50%, the NASDAQ dipping 2.77%, and the MSCI EAFE declining 1.59%. On top of these losses, the S&P 500 posted its longest losing streak since 1980.
With the FBI more or less closing their email case on Clinton — again — the polls have shown a slight lift for Hillary. The futures market then gapped up and as of this writing the S&P500 is up almost 2%.
It seems if the market had a vote it would like to see Hillary just squeak by, with very little change to the balance of power in the house and senate. As I’ve said before, this is a vote to maintain course and speed. The market has priced more of these variables in already. A more extreme outcome — favoring either party — brings a lot more uncertainty to the outcomes. That risk would then likely get priced in as a market decline in the short term.
This is our own version of the Brexit. The question is, are the polls right or not? Voter turnout is likely the deciding factor of this election. We’ll just have to sort it out once the dust clears. Keep in mind the media never wastes a moment to instill fear into the public. After all, good news doesn't get ratings. The graphic below shows CNBC viewership tracked against the performance of the S&P 500. Now, you tell me which they prefer... a higher market or a lower one?
Quote of the week:
November 7, 2016 - ITS HERE... FINALLY. NOW LET'S GET IT OVER!
| November 07, 2016