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What else can I write about last night’s debate?  American politics have just reached a generational low.  I will opine however today’s vitriol is nothing as compared to past tectonic elections.

In my view Donald Trump has no other choice than a scorched earth policy given that the establishment is against his candidacy.  This is not a radical statement but rather an objective observation given the 10:1 margin in negative media stories and the extremely transparent animosity towards him within his own party.

I ask are Trump’s statement as vitriolic and inflammatory as many are suggesting? Tuesday the WSJ editorial page wrote that Secretary of State Kerry said in Afghanistan following that country’s election that he has “a very personal experience” that free and fair elections are hard even in advanced countries stating he is convinced George W. Bush campaign manipulated the voting machines in 2004 to carry Ohio.

Bernie Sanders campaigned on theme that the economy and society is “rigged,” benefiting only the wealthy and the powerful at the expense of everybody else.

And then there is Hillary Clinton.  Where does one start?  WikiLeaks has published volumes which would have sunk any other candidate.

Life is indeed stranger than fiction where perhaps there is indeed a populist revolt against the establishment.  November 9 will answer this question.

Transcending to the markets, equities were higher following oil’s climb to a 15 month high.  Inventories unexpectedly declined again, falling six out of the last seven weeks.  Stores are down about 25 million barrels.  During this period stores were expected to increase by 40 million barrels.

The question to ask is survey techniques wrong?  Or are the assumptions going into these surveys erroneous?  If Trump is the victor, will all ask a similar question about today’s oil inventory forecasts?  How could everyone be so wrong??

Oil also advanced on the Saudi headline that the vast majority of oil producing countries will reduce production.  I cynically ask are all willing to reduce production because of their inability to maintain production at current levels because the lack of infrastructure spending, the result of strained state budgets?  The latter is a statement of weakness; the former is one of strength.

There was little reaction to the Beige Book which indicated the economy “maintained a steady growth pace between late August and early October,” as tight labor market “with nascent wage pressures contributed to a mostly positive outlook.”

Treasuries were nominally lower.  Fed Fund futures are suggesting a 67% chance of an interest rate increase in December.

Last night the foreign markets were up.  London was down 0.11%, Paris up 0.05%,  and Frankfurt up 0.08%.  China was down 0.01%, Japan was up 1.39%and Hang Sang up 0.30%.

The Dow should open flat.  The 10-year is unchanged at 1.75%.

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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.