Today is Election Day. I am certain many will form diametrically diverse conclusions about the outcome. As penned many times to ignore Washington is equivalent to ignoring interest rates and earnings.
I have opined often progressivism is not a viable political agenda in the US given our culture and heritage. Yes there have been times where the country has experimented with progressivism, all of which ended in spectacular failure because of “our can due” society that believes the individual is the path to success not the government.
As I wrote yesterday, there is a possibility the President may set a record that no President would like to make…the greatest number of seats his party lost during an Administration. There is also a strong probability the President my usher in the greatest number of Republican House members ever in history
Is this a trashing of Progressivism or the President’s agenda, both of which are intractably related? Perhaps a very damning indictment of the President is according to Politico only 10% of Republicans and Independents “like” the President versus 35% in 2012.
All must remember the President was reelected on his “likeability and credibility” not his economic policies. As the President himself stated, today’s election is an election about his agenda and policies. The subjective fluff is gone.
I will again write if there is yet another change of power, the odds of meaningful Congressional tax, entitlement, and debt reform rises exponentially, all of which should increase confidence.
Every sentiment survey cites fear of government is a major reason why confidence is lacking, which in turn is a major reason why demand is soft.
QE has exponentially increased liquidity but this liquidity has not increased demand or prices based upon the accepted metrics. It is now a publically stated goal of all Central Banks is to increase demand pull inflation.
As noted yesterday, this is potentially a dangerous goal for once the proverbial inflationary genie is out of the bottle, it is difficult for her to return and the unintended consequences are infinite.
Western economies are asset driven defined as borrowing money today and pay back these funds with tomorrow’s dollars with the asset as collateral, collateral rising in value because of inflation. Like eating fried chicken, a little bit of fried chicken is good but too much of bad thing is bad as inflation devastates individual’s purchasing power.
Like most, tonight I will be watching the returns. Will the election increase confidence and the rekindling of the proverbial animal spirits? If the sentiment surveys and current polls are correct, I would argue yes.
Commenting about yesterday’s market activity, all markets were relatively quiet with all talking about today’s election. Tomorrow the topic will be the outcome of the election and Thursday the upcoming BLS monthly labor report released Friday.
Last night the foreign markets were mixed. London was down 0.05%, Paris down 0.11% and Frankfurt up 0.23%. Japan was up 2.73% and Hang Sang down 0.29%.
The Dow should open nominally lower. The 10-year is up 8/32 to yield 2.32%.
