Market Briefing For November 3, 2016

Defensive stances across the Board remain appropriate for investor portfolio structures, as tough as that is given year-end strategies often being contemplated by many. There are historic and really unprecedented uncertainties confronting markets, and that matters.

Those uncertainties also include reasons why, regardless of politics, there is unfinished business on the downside, with respect to both equity and credit markets; not to mention the volatility in Oil and Dollar markets too. Fund flows (so-called 'smart money') telegraphed this for some time.

As far as the growing divide between the electorate and Washington, as is more clearly depicted to the average voter who may long have been suspicious about politicians, but just slightly aware as to the depth of misdeeds (corruption if one wishes to call it) as well as patronage... well I don't envision this necessarily leading to a Constitutional crisis some see, although if it gets that far of course that's not bullish either.

Rather I see the public as no longer hoodwinkable by politicians as for so long were the 'spin doctor' presumptions; nor do I believe that even a slew of (newly embarrassed) media news producers will need to soften stories as they so often have. Most issues said to 'poison the well' now, are actually issues already known (in some cases for year), which were suppressed to being tied together in a pattern for pubic consumption.

As that diminishes, it's not so much an endorsement of Trump as a less enthusiastic embrace of (or even a turning-away-from) Clinton. Again, I say this because the market sees this; it has been implicit for weeks but come to a head more recently, and though it is being 'blamed' for market weakness, it is but one of the many Swans that have been circling.

That matters, because regardless of how the Election goes underlying fundamental and economic concerns will persist. Thus even if we get a relief rally (presumably from lower levels) after the vote is digested (and that's sure not a certainty) one had better suspect unfinished business shall remain on the downside, because the Election was a volatility factor at the time of year we looked for downside anyway. But not the main event with respect to a sober assessment of price/value market relationships, not to even mention the credit market.

A few media pundits express curiosity that the President and AG Lynch have 'sort of' expressed support for the FBI Director. May I suggest that the 'spin era' penchant for secrecy and deception (Iran is one example), is 'busted' and the White House and Justice know this? Or worse, they actually know more than the rest of us about the documents under review by the FBI now and are gradually putting themselves into shall we say a 'normal posture' ahead of further revelations likely forthcoming (of course it's impossible to say what emerges, or particularly, when).

All of this has stock and credit market meaning. So does the consistent selling on good news (such as you saw with the Facebook results today incidentally) and bad news (so many others). That alone says: markets going lower.

Technically, we warned that S&P 2110-20 was the last-ditch support as the process evolved; and that once we got our close (this week said I confidently a few days ago) under 2100 (especially in 'Cash' S&P); we'd find a rebound temporarily perhaps, with such reprieves failing as prices resuming declines to lower levels. That's occurred now in both the 'Cash and Futures' as far as the S&P.

During this entire distribution it has resembled (for months not merely as the political antics took center stage) rearranging of Titanic deck-chairs, more than a sensible defensive strategy of protecting investment assets (my favorite phrase: 'worry more about the return OF your money, than the return ON your money' at such times in extended markets).