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%.