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Are the markets suffering a massive hangover since the election?  Equities have advanced, Treasuries have been crushed since 2001 and the dollar is around decade highs.

Yesterday’s primary narrative was the upcoming OPEC meeting, the changing headlines moved crude.  A secondary story is Sunday’s Italian referendum.

What are the odds all markets now consolidate and enter into a period of relative quietness as been the trend for the year? To refresh, equities stumbled in January/February, recovered March/April, retraced May/June and was quiet most of the summer. And then there was November 8.

If the 2016 trend continues, markets may quietly retrace some of its recent gains/losses until mid-January, perhaps until the commencement of fourth quarter earnings season and the inauguration.  At that juncture, the direction of all markets may be dictated by the perceived early successes/failures of the Trump administration and data.

Speaking of data, this is a data filled week culminating with the release of November’s employment report.  The markets are suggesting a 100% probability of a rate increase in December and around a 65% probability of a “one handle” by early mid-summer.

Last night the foreign markets were mixed.  London was down 0.54%, Paris up 0.56% and Frankfurt up 0.04%.  China was up 0.18%, Japan down 0.27% and Hang Sang down 0.41%.

The Dow should open flat to nominally lower.  The 10-year is off 3/32 to yield 2.32%.

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Ken Engelke

Chief Economic Strategist Managing Director

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.