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Markets are becoming spooked by a possible Trump victory.  How scared is the Democratic Establishment?

If one takes President Obama’s statements at face value…petrified.  Yesterday at a North Carolina rally, the President stated “I hate to put pressure on you but the fate of the republic rests on your shoulders.  The fate of the world is teetering.”

When I first read this words my immediate thought went to  Star Wars as such comments were echoed as the climactic battle for the “republic” was about to commence.

Is the President being sensationalist?  Does the President really wield this much power and if so then The People and The Government have catastrophically failed.  There has been a complete obliteration to the “Balance of Power” and to The Constitution, a self-inflicted obliteration caused by the lack of education of our electoral process.  Our self-induced ignorance was manipulated by a few.

If the President’ statements are remotely accurate, it is no wonder why the markets are nervous.

Four years ago I was writing about the tectonic changes occurring in the electorate, about the possibility of the silent majority being awaken, the rise of the People over the Establishment.

Wow!  I did not realize how prophetic my words would become.

Perhaps the only concrete statement to make is the next four days the animosity and acrimony will rise to a level not experienced in a generation.

Today October’s labor data is released.  Non-farm and private sector polls are expected to increase by 175k and 170k, respectively. A 4.9% unemployment rate, a 0.3% increase average hourly earnings and a 34.4 hour week is forecasted.  The labor participation rate is expected to be 62.9%.

Will the markets focus upon this data or will all attention be on the election?  I am guessing the latter.

Commenting on yesterday’s market action, the NASDAQ fell another 1.0% as disappointing results from Facebook dragged down technology shares.  The Dow and S & P were nominally lower.  Speaking of which, the S & P 500 is now down eight consecutive days, the longest decline since 2008 according to Bloomberg.

Bespoke Investment Group wrote yesterday the five days before a Presidential vote, the S & P 500 has risen 20 of the past 22 cycles.  Bespoke also wrote the S & P 500 has climbed an average of 1.9% in the run up to the election going back to 1928 but is down 1.6% since Monday.

Treasuries were down with 10-year dropping 3/32 and the 30-yeara of by 22/32.

Last night the foreign markets were down.  London was down 1.34%, Paris down 0.95% and Frankfurt down 0.85%.  China was down 0.21%,  Japan down 1.34% and Hang Sang down 0.18%.

The Dow should open flat but this could perhaps change with the release of the 8:30 data.  The 10-year is up 6/32 to yield 1.80%.

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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.