Today is Election Day. There will not be a shortage of opinions about the outcome. I have framed today as a battle between the economy and the traditional outcome of midterms amplified by the anathema of President by the Establishment
To refresh all historically voters vote their pocket book. Also historically there have only been two times in 21 midterms the party of the incumbent did not lose seats…1932 and 2002. Historically there is a loss of 30 House seats and 4 Senate seats for the incumbent.
I have opined economics is a stronger force than a 91% historical precedence in suggesting a political outcome, the non-consensus view. All will know the answer by this time tomorrow.
Commenting about yesterday’s market action, technology continued its slide on reports that Apple will not boost iPhone construction. Oil advanced on Iranian sanctions as did the financials…aka the value shares.
Treasuries closed nominally lower in yield.
Changing topics, many times I have commented about the breakdown of the vast majority of trading strategies. According to Deutsche Bank, a whopping 89% of assets have handed investors losses in US dollar terms in 2018, more than any previous year going back to 1901.
Wow! Could we make the assumptions that today’s financial alchemy which has entirely dominated the financial landscape is just that…alchemy? There is no place to hide.
I have contended for many years the markets are imbalanced where this relentless push to lower execution expenses and increased the speed of execution is a detriment to all, sacrificing liquidity and capitalization necessary for efficient markets.
Unfortunately it will take a crisis to challenge trading mechanics. Hopefully this time it will be different.
Last night the foreign markets were mixed. London was down 0.59%, Paris down 0.20% and Frankfurt down 0.13%. China was down 0.23%, Japan up 1.14% and Hang Sang up 0.72%.
The Dow should open nervously lower with all eyes on the election. Tomorrow attention will be focused on the infinite number of outcomes because of the election, the commencement of the two day Fed meeting and the upcoming G-20 meeting where the odds of a trade deal changes almost hourly. The 10-year is up 2/32 to yield 3.20%.
