Market Strategy Radar Screen Weekly November 07, 2016

  And Now You Tell Me?

From news item to news item, barb to barb and accusation to accusation, the process of the US presidential election 2016 has become a near if not purely burdensome item on the horizon to an electorate that appears (from both sides of the aisle) to have grown increasingly desirous and eager to get this thing over and move on.

What began some 18 months or so ago with unprecedented lack of traditional election primary style from both sides of the political aisle initially captured voters’ attention, interest and even entertained them like no other presidential stateside primary and election of recent memory.

Since the major parties’ respective conventions in August, the tone of the debate, level of drama and rancor have increased to such levels as to make the political process seem increasingly burdensome.

With the aforementioned latest news item we’d expect that pre-election Monday will likely be clouded and obfuscated with conjecture, ponder, projection and pontification as to how this latest letter will affect or not affect the outcome of the presidential race this Tuesday.

From our perspective, the market’s machinations to the downside since the letter of October 28th have served to position the markets better in the event of a surprise outcome to the election.

The majority of pollsters had earlier pretty much in a pre-Brexit like manner predicted an easy and sizable victory for the Democratic presidential candidate. As of last week those earlier projections had been somewhat shaken up and even rightsized. The result has hopefully brought a touch of humility to the electoral landscape that might just serve the markets, pollsters, the electorate and even the politicos some good in the long run.

Don’t forget to vote for your favored candidates tomorrow, Election Day 2016.

Strategic Market Musings – there’s always an almanac anecdote somewhere…

Last week as traders’ expectations for a status quo outcome in which a Democratic victory in the White House would be offset by a Republican Congress might be at risk, the S&P 500 index slipped a total of just under 3% in aggregate over the course of eight back-to-back trading sessions. The sequential nature of the decline caused some observers to raise concern and note that the last time the S&P 500 had moved lower in eight straight sessions was in 2008.

The comparison to 2008 caused agita among some market participants who appeared to suffer from a lapse in memory as to what was happening midst the crisis of 2008 in comparison to the current economic expansion in 2016 (which based on last week’s economic data remains apparently sustainable for now).

In our opinion, broad extrapolation of anecdotal evidence is a reminder for investors to always check under the hood of broadly painted observations and statements to avoid arriving at hasty conclusions.

With the nonfarm payroll number in the rearview mirror (and with upward revisions to the prior nonfarm payroll number) along with other economic data and even revenue and earnings for Q3 pointing to an increased likelihood of a Fed hike of 25 basis points in December (barring a bolt from the blue or an unexpected reversal of fortune), and with only one more day before Election Day 2016 uncertainties that have held the market hostage too long likely to fade soon, a relief rally may not be too far distant.

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