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My take on the Market today

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Wilbur:
The stock market is having a pretty good day today on the heels of the Comey retraction of the investigation of Hillary. I wanted to throw out a couple of comments on that from my perspective. I don't claim to be a genius and I welcome other thoughts on the subject but this is how I see it.

After Comey's letter 10 days ago that said they were "re-opening" the FBI investigation into Hillary's illegal activities the market trended down losing about 2% in that time period. With the "new" letter last night the market is back up the 2% to where it was just before the letter announcing the "re-opening" of the investigation. So this is not a huge rally saying the economy will be better off with Hillary in my mind. It's a "reset" to where we were before. That's the first part.

But lets talk about why the markets go up or down anyway on information like this- ultimately we don't know who will win the election but the polls all point to Hillary. Markets move to things that they can factor in. But when there is uncertainty, the markets will get out of the way (ie sell off) until the "uncertain" becomes "known".

We see it all the time with companies and their warnings about future sales and earnings. A company will have great earnings but also say that the next quarter or year or something will be challenging and "guide" analysts to lower expectations. The stock will sell off as the future at that point is unknown. It doesn't change the fact that they just had good earnings, but the future now suddenly looks "less bright" so Wall Street reacts very quickly.

Other times you see a company come out with blow out sales and earnings and the stock trades off anyway. That is because while the formal guidance was for $X per share in earnings the street actually was pricing in $X+Y for earnings and if the company doesn't hit X+Y its seen as a disappointment. So the earnings are right where the company thought they would be but the Street got overeager for some reason and when that optimism wasn't borne out the Street sold off the company. 

As relates to the election the Street feels Hillary is a known entity. They may or may not like what she has done, what she represents or anything else. But she is a known item and won't look to change too many things from where they were under Obama (hence the 3rd Obama term discussion). Trump is the ultimate wildcard. If he renegotiates NAFTA how does that change things for public companies and their share prices? If he brings coal back in a big way what does that do to the oil companies? If he gets rid of Obamacare what does that mean for insurance companies and drug companies? If he cuts taxes like he's talking about what does that mean for the bond market? All these things should ultimately be positive things for the US economy and US jobs (I think) but there is "uncertainty" with a capital "U". And when Wall Street is faced with uncertainty it heads for the door until the uncertainty passes.

Think back (for those of us with some grey hair) to the first Gulf War when Saddam invaded Kuwait. The market had been on a roller coaster and had headed down as we headed toward the use of military force too remove Saddam from Kuwait. Jim Baker had been sent to try to negotiate a removal of Saddam from Kuwait and I remember his press conference afterwards so clearly....when he started speaking the market virtually stopped trading....everyone was watching....he talked about what they had wanted to do (to get Saddam to leave)....then he said the word "unfortunately...." and proceeded to explain why the negotiations failed. The SECOND he said "unfortunately" the market traded off and fell big time. Uncertainty was now heading to certainty but it was a shooting war which had its own "uncertainty".

When the buildup of forces occurred the market was trending lower.  There was uncertainty about whether Saddam would use chemical weapons, would stealth technology work, etc etc. The market traded off Monday through Thursday of that last week and then Thursday night the shooting started. (That was the night Bernie Shaw was under a desk in his hotel reporting that the shooting had started). Overseas markets traded off quickly but by the time the US markets opened the next morning the market traded up big. The "uncertainty" over what would happen in the war (would we succeed, would the stealth technology work etc.) had dissipated pretty quickly.

Sorry for the long winded comments but I want what Trump will do for the US for so many reasons. But while it might seem Wall Street "wants" Hillary the reality is Wall Street "wants" certainty. And until they see it they tend to head for the exits which drives down prices, even if what they are "running away from" is a good thing for us long term. YMMV.....   

Flyin6:
I think your analysis is spot on

Hillary is not liked by wall street

It is only that she is a known commodity

With H you get the same deals

With T you get trade deals gettin' monkeyed with and the repercussions all that creates. Short term: Turbulence...Long term US wins

The wall = uncertainty of how Mexico will react, what 5 million illegals might do and short term turbulence. Long term = stability and security

With T the market will be far, far better off in 24 months, but will be a traders nightmare for a year +.

I like what the 2-2 SAS says:

Who Dares, Wins!

Dawg25385:
Dow futures down 700 pts on likely T win. Will be brexit effect. The certainty is a huge plunge tomorrow. Uncertainty is the rebound beyond the short term.

And the fed will raise rates now, making it worse. Hang on folks, going for a ride


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TexasRedNeck:
Buy on the dip. Just like brexit


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Bob Smith:

--- Quote from: TexasRedNeck on November 09, 2016, 12:23:54 AM ---Buy on the dip. Just like brexit


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--- End quote ---

Sounds good but I was also told not to sell on a dip, so no money to buy. Hopefully the firm I am with pulled it all aside with a wait and see before it went south tonight. FAT CHANCE

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