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In my view the Minutes from the September FOMC meeting did not break any new ground.  They signaled policy makers will probably soon lift interest rates as the economy is slowly but steadily improving.  The odds for a December increase remained unchanged around 67%.  Market were relatively quiet and unchanged.

There are many bulge bracket firms forecasting a significant decline in the S & P predicated upon the imbalances of today’s cross correlated technology based trading amplified by the proliferation of ETFs, ETFs that few understand.

I write cynically do most recognize that ETFs are only a collection of derivatives and futures not individual stocks which are the composition of mutual and closed ended funds?   Moreover most do not have any idea about the leverage employed.

Several times I have opined today’s ETFs are about as opaque and as dangerous as yesterday’s CDOs and CMOs.  I hope I am wrong in this view.

At this juncture the markets have been complacent about the election. Is this about to change, a huge comment based upon the consensus view that Trump has all but lost.  Twenty six days is a long time and I think Clinton’s support is not as deep or as great as the pundits suggest.

Moreover according to IBD, 80% of election stories are obstinacy negative about Trump.

As an educated white guy, I am nervous to write that I am voting against Clinton for doing such I could be branded as homophobic, sexist and a racist person that denigrates women.  I ask how many other shares my apprehension.

But if this is a valid hesitancy, have we not surrendered our freedom?

A major reason why I believe Trump’s odds are considerably higher than the media suggests is that society is tired of politicians from both parties.  This is not a radical thought.  I live in the district where Dave Brat beat the House Majority leader in a republican primary that was expected not to be a contest.

It was the largest upset since 1896.  In many ways this June 2014 primary was the birth of the antiestablishment movement that has since elevated the likes of Trump and Sanders.

Cantor lost by a wide margin and I did not vote for Brat but instead voted against Eric Cantor as I believe Cantor represented everything wrong with Washington.  Will there be even a larger upset on November 8?

I place the odds at 45%.  Wow!!  Society is angry.  Only 9% of the electorate views Congress favorably.  10% view the press favorably and only 11% think Clinton is honest and trustworthy.  Seventy five percent believes the country is headed in the wrong direction.

To put this data into perspective 14% believe Big Foot is real.

Enough of waxing politically, what will happen today?

Last night the foreign markets were down.  London was down 0.94%, Paris down 1.47%, and Frankfurt down 1.33%.  China was up 0.09%, Japan down 0.39%and Hang Sang down 1.61%.

The Dow should open moderately lower following an unexpected drop in Chinese exports revived concerns about the global economy as the Fed considers rising interest rates. The 10-year is up 5/32 to yield 1.76%.

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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.