It's election day.
Time to erase a huge mistake that was made in 2016 or time to push America further down the path to Facism – I wonder what my fellow countrymen will choose. If we do nothing about Global Warming for another two years – I don't think it will matter much who's in charge during America's last century, will it? So I guess we have that to look foward too – a slow, burning extinction that erases this whole mess of species from the annals of Galactic History, just another start-up civilization that wasn't smart enough to make it.
Unfortunately, we are not likely to have a resolution today as many of the elections are so close, it will take days and maybe weeks to determine the winners. Also, if the diffference in the House or Senate is just one or two seats, look for any close election to be challlenged. That's the craziness that's ahead of us, plus the Fed has a statement out Thursday at 2pm and 3 Fed speakers Friday morning so we're not going to know a damned thing until next week for sure…
Meanwhile, on a bullish note, China is now saying they do want to talk trade some more – that should help a bit. Oil collapsed to $62.50 as the Iraq Sanctions finally kicked in. As I noted in yesterday's Morning Report, the sanctions are so weak they are not expected to affect the energy markets – just more smoke and mirrors from Team Trump. Falling oil prices are a drag on the Dow and S&P but it's not likely we stay this low – especially into the Thankgiving Holiday.
So far, we've had a very mild correction with the S&P sitting 6.6% below its all-time high. Unfortunately, it has to get back under 6% for us to call it a strong bounce, so we're still in "wait and see" mode ahead of the elections and the Fed.
We're well into earnings season and, for the first time since well before Trump was elected, more companies are revising their forecasts lower than higher. There's no reason to panic yet, as 1/3 of the companies still have to report – THEN we can panic!
Unfortunately, once these revisions start crashing – they tend to get worse before they get better but, unfortunately, Guidance has already collapsed (something we warned you about at the start of earnings season) and it's since gotten worse and well into a negative ratio with about 60% of the S&P 500 having reported already.
We're already very well-hedged so there's nothing to do but wait and see who's in charge tomorrow – best of luck!