Election notes

Since I had 15 minutes of sleep and since market all over the map overnight, will wait to give you bigger report on both markets and the election tonight. I also have to change my winners/losers report completely.

On the open:

Biotechs/drugs soaring as Trump and a Republican Congress essentially takes all the drug price scrutiny heat off the pharma sector.

Hospitals down big as payments to hospitals go lower if Obamacare goes bye bye.

Gold up big on “uncertainty!”

If Trump follows through on lower corporate taxes and corporate America’s ability to repatriate cash, that would be great news for the economy.

While futures are down about 225 on the dow, it was over 800 down overnight. Do not believe the doomsayers that the world ends because of Trump. Do not believe the agenda-driven economists that said he is the anti-Christ for the economy. He is not. We will have more on that tonight.

Our near term advice on market. Relax. Take a breath. Let this flush itself out. Anything is possible here. Markets were already swooning before the election.

Lastly, the one thing markets could very well worry about is that Trump will dump Yellen as he is sick and tired, like us, of the easy money that has distorted every asset price across the globe and have screwed savers out of their bucks on riskless income investments. Due to the fact markets have been addicted to central bank largesse, taking away that “punch bowl” could cause markets to slump. Keep in mind, the Dow/S&P haven’t had a bear market since 09…SO IT IS WAY OVERDUE ANYHOW!

The Morning Look

Market Update:

Stock futures plunged nearly 900 points over night and are now bouncing back after the Trump victory.

Gary’s Thoughts: That’s not a bounceback. That’s a monstrous reversal.

Economic Calendar:

  • Bank Reserve Settlement
  • MBA Mortgage Applications 7:00 AM ET
  • Wholesale Trade 10:00 AM ET
  • EIA Petroleum Status Report 10:30 AM ET
  • Neel Kashkari Speaks 1:30 PM ET
  • John Williams Speaks 9:00 PM ET

Highlights:

  • Finally the highly contentious 2016 election is over
    Gary’s Thoughts: Can we now get back to watching fruit loops ads?
  • Markets react to Trump victory
    Gary’s Thoughts: Don’t blink!

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Government Run Markets

When we coined the term government run markets, we were basically talking about central banks, both here and around the globe. Little did we know we would have to include the FBI.

Tonight, the FBI turned tail again (are you dizzy yet?). We will leave that for another day. As we write this, Dow futures are up 200 but can change overnight. They are up because in the very short run, markets are happy when Hillary Clinton looks like she is winning. But one thing is wrong. Hillary Clinton has been leading in the polls for the past 9 days as the market went into nausea land. We’ll know a lot more after tomorrow night…finally.

If markets react well to Miss Hillary in the short run, it is because she would continue the easy money spigot. That’s all. But be careful about becoming euphoric. Notwithstanding tomorrow’s gap to the upside, they were due to bounce anyhow as markets have become about as stretched and oversold to the downside as they typically get. So slow your roll.

The fact is the tape is a mess. Many leaders have been trashed and a ton of areas are in their own bearish phase. We remain defensive and cautious regardless of what may or may not happen tomorrow.

To accentuate the positive:

Financials still do have the relative strength. This will be vital to continue. On top of that, we like the recent action in the transports as they look like they want to go topside from this range. Look no further than plunging oil prices for the why. The oft-mentioned semis continue to act well but careful here as they have had a long run and now trade below the 50 day average.

We will have a lot more tomorrow on the election as well as the market.

The Morning Look

Market Update:

Stock futures are up nicely ahead of Monday’s open after the FBI said Clinton was all clear from the latest email scandal.  Now the world waits for the outcome of Tuesday’s much anticipated election.

Gary’s Thoughts: Nicely isnt the word…strong is better but markets were extremely oversold and due to bounce anyhow. The Comey decision just helped it along. Keep in mind, market reaction is about Hillary keeping easy money spigot as Trump has stated the opposite. More after the close. Careful here.

Economic Calendar:

  • Gallup US Consumer Spending Measure 8:30 AM ET
  • Labor Market Conditions Index 10:00 AM ET
  • TD Ameritrade IMX 12:30 PM ET
  • Charles Evans Speaks 2:45 PM ET
  • Consumer Credit 3:00 PM ET
  • Treasury STRIPS 3:00 PM ET

Highlights:

  • Buy Gold No Matter Who Wins the Election, HSBC Says
    Gary’s Thoughts:  Only buy gold if it is in a bull market. It is not bullish right now.
  • FBI says Clinton is all clear- after latest scandal
    Gary’s Thoughts: We can be sarcastic but will hold our tongue on this until tonight.

MIDDAY THOUGHTS

We have been watching the semis and the financials closely. They have been the ports in the storm.

The SOX, as we write this is pulling another 9/12 and 10/13. Both those days teased breaks to the downside only to reverse up at important support. This is vital to the market that it holds. It is currently a tad below the 50 day but working on a reversal. Notice on 10/13, it undercut and finished above.

The financials started ugly today and are now up. They remain in range…nothing great to the upside but no harm to the downside.

On a positive note, we wrote yesterday that the transports looked ready to go topside. Lower oil prices definitely are helping. Today, transports are again teasing the move higher. Strength in airlines(big beneficiary of lower oil)helping out.

After that, pretty much a random mess.

SO IT’S TRUMP THAT WILL CAUSE ALL THE PROBLEMS?

    “SO IT’S TRUMP WHO WILL CAUSE ALL THE PROBLEMS?”
 
By Gary Kaltbaum
November 4,2016
 
Many are wringing their hands on why the markets are buckling. Many are blaming the swoon on the better poll numbers for Trump. We think they may be right but not for the reasons many are giving.
 
Recently, 370 economists said the world would crash if Trump became president. Recently, a few wall street writers said the same. Really? How would they know? They don’t! The fact is people have agendas. People have ulterior motives. People are like a flock of geese. They form into one line joining each other for the sake of joining each other. And by the way, Gruber is one of the 370 as in WE HAVE BEEN GRUBERED!
 
We have not much blood in this game. We are not thrilled with either candidate. One has proven to be an influence peddling, corrupt politician and the other, in our humblest opinion, is all over the map. But let’s get some facts out.
 
Over the past 8 years:
 
Debt has skyrocketed $9 trillion.
 
Federal spending reached a record $3.8 trillion this year. The last year of Clinton presidency, federal spending was less than $1.8 trillion. Where the hell and what the hell is the extra $2 trillion being spent on because our eyes are not finding it?
 
Deficits are $600 billion. Of course, the president said he has cut the deficit in half. Cue Jon Lovitz!
 
Homelessness is out of hand.
 
Poverty is out of hand.
 
The racial divide is wider than we have seen in ages.
 
Savers have been screwed as there are no riskless income investments.
 
Leverage and debt in the system has far surpassed 07-08. Guess what caused 07-8? Leverage and debt.
 
The fed has had to keep rates at 0% for the whole 8 years, print $4-5 trillion just to keep the economy having a pulse and the markets up. The rest of the central bank lemmings followed suit.
 
Financial bubbles abound.
 
Obamacare costs skyrocketed with the main architect (Gruber) of Obamacare stating they had to lie to get it passed.
 
And we haven’t even started on foreign policy.
 
With all that…the debt, deficits, the out-of-hand federal spending, the 0% rates, the printing of money and everything else…we are now told by these people that it will be Trump that causes problems? We have news for these people who have watched and done nothing to abate all the deterioration…Donald Trump has never run this country. Donald Trump did not oversee all this nonsense yet it is him that will cause problems? We have more news for you. It is the past 8 years that have injected millions of termites into this economy that will cause a meltdown. It is a central bank that has created distortions like we have never experienced that will cause it. Remember…agendas! And to be clear, George Bush was no help either as debt blew up $5 trillion under his watch.
 
If markets are going to buckle in the near-term because of Trump, it will be because he will try and roll back all this nonsense that have created all these bubbles. It will be because he would send the Yellen/Bernanke partnership into the dust bin of easy money stupidity. It would be because he would stop the gargantuan growth of government spending that continues to drain the economy of its potential. As government grows, the economy slows because government only lives and breathes because of our tax dollars and whatever is sent is still not enough as Washington refuses to balance the checkbooks.
 
For longer term success, something must be done. There is no way we can continue the trajectory of bigger government, higher taxes, more regulation, more over-reach which seems to be the mantra of Hillary Clinton. The greatness of this country has nothing to do with Washington DC but the millions of people who get up every day wanted to do better for themselves and their families. Washington DC just stands in the way. It is imperative we get back to WE THE PEOPLE because WE THE POLITICIANS just does not work.
 
So maybe some pain first…maybe. Just remember, these same geniuses all told us the end of the world would come because of Brexit. Again…agendas!
 
We believe in us. We believe in free markets. We believe in the free flow of capitalism and unfortunately, this country has been heading towards a Bernie Sanders/Elizabeth Warren socialism fantasy that just doesn’t work. Never has…never will. People like Sanders, Warren, Clinton have never created a dime of wealth, never created a job and have no understanding of the economy or business or hard work or sweat or toil or long hours or risk taking but they continue to tell us they can run things better than us. Ask any Venezuelan how things are.
 
We have no clue what kind of President Trump would be as again, all over the map, but there are only two choices and frankly, maybe the unknown is better than the known! Whatever you decide…make sure you vote because your vote counts.

The Morning Look

Market Update:

Stock futures are relatively quiet ahead of Friday’s open as investors digest a busy week of earnings, central bank and political news.

Gary’s Thoughts: Fake employment number out…as expected. Futures flat. Not a lot to take from it. The trees…market is very short-term oversold and could bounce at any time. The forest…lots of technical damage done. To take the positive side: financials still act fine…transports actually look like they can break above range…semis, while a smidge below the 50 day, are still not broken…steel stocks, on horrible earnings act decently here. But to repeat…lots of damage done. Patience imperative unless you like trading random bounces.

 

Economic Calendar:

  • Employment Situation 8:30 AM ET
  • International Trade 8:30 AM ET
  • Dennis Lockhart Speaks 8:30 AM ET
  • Rob Kaplan Speaks 12:00 PM ET
  • Baker-Hughes Rig Count 1:00 PM ET
  • Stanley Fischer Speaks 4:00 PM ET

Highlights:

  • Colorado voters have the chance to kill Obamacare in the state
    Gary’s Thoughts: It will be killed by its own weight.
  • Oil hits new 5-week low below $45, as global supply glut scares traders
    Gary’s Thoughts: Recent numbers define glut.

The Closing Look

Stocks opened higher but quickly gave up the gains and spent most of the day near unchanged as sellers remained in control. Overnight, two major central banks moved away from an ultra-easy money stance. The Bank of England and China’s Central Bank both said they will not do more to stimulate markets right now. The BOE dropped guidance of a further rate cut. Instead, China’s Central Bank said it wants to take measure to cut the froth out of the system. In the U.S., economic data was mixed. initial jobless claims rose to 265,000, weaker than the Street’s 258,000 estimate. Elsewhere, third-quarter productivity increased by 3.1%, well above the expected rise of 2%. The ISM non-manufacturing index missed estimates last month while factory orders rose for a third straight month and topped estimates. Earnings reactions continued to awful: Facebook ($FB), FitBit ($FIT), Shopify (SHOP), Godaddy (GDDY) were among some of the big losers on Thursday. Charter communications (CHTR) gapped up at the open but immediately sold off and closed lower.

Gary’s Thoughts: Pay no attention to the Dow only down 29 points…more blow-ups and suspect action. When a market is so oversold and still goes down…not thrilling. Maybe tomorrow off of the fake job’s number.

BY FAR, OUR FAVORITE STORY OF THE DAY!

SOURCE: http://www.espn.com/mlb/story/_/id/17963668/keeping-promise-man-listens-chicago-cubs-win-dad-gravesite