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Markets Were Initially Nervously Quiet and Volatile, Volatility the Result of Considerable Anxiety Surrounding the Constant Headlines of War and Disease, Possible Slowing Global Growth, Monetary Policy Uncertainty, All Amplified by the Lack of Leadership.

Markets were initially nervously quiet and volatile, volatility the result of considerable anxiety surrounding the constant headlines of war and disease, possible slowing global growth, monetary policy uncertainty, all amplified by the lack of leadership.  The popular averages were relatively unchanged before the Canadian shooting, then fell about 1% and closed around their lows

Will the outcome of the election change investor psychology for as most will now acknowledge Washington is a major hindrance in building confidence and enthusiasm?

In my view, many are exhausted of the status quo, now demanding compromising leadership from Washington.  A recent NBC/WSJ poll stated that 50% of respondents are now opting leadership that sought consensus.  In 2010 only 34% of respondents sought candidates that favored compromise and 57% wanted candidates to stand their ground regardless.  Today only 42% of respondents wanted leaders who stick to their guns.

Wow!  What a change.

Speaking of change, the President is now considered toxic.  MSNBC anchor Chris Matthews stated the President is “Ebolic.”    Will the President continued to be regarded as toxic waste if 2014 is a historic election?  Will all Democratic leaders shun him in a similar manner as 2014 Democratic mid-term election candidates?

Life is indeed stranger than fiction where even the most prolific and imagined writers cannot write about life’s true experiences, true experiences that today can reach the entire world in seconds.

What will happen today?  The Index of Leading Economic Indicators (LEI), two regional manufacturing indices, a home price index and weekly jobless claims are released.

And then there is a plethora of earning announcements, announcements to date that have exceed both revenue and profit expectations.

Equities are valued by present and future cash flows discounted by some interest rate.  If the economic environment is improving, interest rates are expected to remain unchanged and profits are higher, should not stock prices not rise?

The answer is yes, especially if it is believed that tomorrow will be better than today.

Last night the foreign markets were mixed.   London was down 0.53%, Paris up 0.02% and Frankfurt up 0.15%.  Japan was down 0.37% and Hang Sang down 0.30%.

The Dow should open moderately higher as manufacturing unexpectedly expanded in Europe and profit optimism.  The 10-year is off 6/32 to yield 2.23%.

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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.