Market Briefing For Wednesday, Nov. 4

Blue waves in Winter - can turn one red, even though 'chill' initially seemed so refreshing. How such quick dips into presumably chillier times so many see for investors as inducing portfolio frostbite, might not turn out to be so frigid.

In this regard there's reason I've suggested next year will be the start of better times for the Country, regardless of the initial reactions to the Vote. And both of the Parties (and candidates) are aimed for Stimulus and serious spending. (I know we can't afford it, but there basically is little alternative, as you'll likely here from the FOMC Metting seemingly ignored by the markets.)

If the outcome is widely as seems projected on this Election Day report, hours before you'll see which way the 'waves' actually crest, it might be time to 'chill' and await the outcomes, especially as relates to Congress, not just the top of the ticket. Whether waves are of a blue hue with red patches (sort of like what Florida calls a seasonal 'red tide'), we're unlikely to embark on a devastating path, or any of the extreme ruminations heard during what of course has been an unprecedented experience. And the structure of the SCOTUS assures that too, although politicians sometimes think they can carry things too radically.

A 'blue wave' has got to be an expectation given how early hints imply more moves that way, like the AFL-CIO switch back to Biden after going for Trump back in 2016, which was part of my suspicion Trump would prevail then, when I saw a USW banner drop from a new high-rise in NYC 'for Trump') it implied yet-another shift seeking 'change' at time time to Trump not Clinton.

There is pressure on Biden to resist the demands from the far-left, and really I suspect he (if he wins) comes-in with people he trusts for many years. And for sure that's far more predictable than forcing perceived radical thinking upon a Nation that is now focused on moving past COVID-19, and then we can have a time to reflect on adjustments or changes within various areas of society.

Now this fight may not be over, I realize that. I focus on cohesive governance that tries to end the divisiveness because we need that (yes the comfort food for the Nation and the market by the way). And after his own bout with COVID, I even suspect Trump may be coming-around to calmer governing styles. Oh maybe not entirely the Centrist approach, but generally so for these next few years, no matter who is President. Oh for this evening, here's what S&P did after votes for the ensuring 10 days in recent elections (SPX).

Executive Summary:

• The market looks forward to having this Election rancor behind, and sees optimistic prospects even regardless who wins after all this divisiveness.

• And that goes against the alarmists (or foreign sources?) focusing on the movements of police and National Guard, which is preparing just-in-case, while normal Americans hope is a precaution that won't be engaged.

• Historic voting and lack of disenfranchising reflects not so much the right or left, but the desire by people so frustrated this year to be 'heard', this year they're heard, and thus however it tallies-out, no need for protests, and that's what's wrong with any state that tried to constrain voting.

• Everyone had their proper say in the vote, as that's energizing enough, as we go forward and it looks like everyone has be motivated to take part.

• Senate Control may be more significant than the White House, at least from the market's perspective, as relates to 'fiscal expansion', however both sides are in-favor of infrastructure and stimulus.

• The strong market behavior of the past two days I believe reflects what is a common destination for business (not taxes) in the next couple of years.

• At the same time the concern about pulling-forward capital gains sales to late 2020 instead of deferring to the new tax year, might be behind and a significant fundamental aspect of the preceding period of shakeouts.

• Note that we consistently called for shakeouts and correction, and not the catastrophic decline the super-bears keep pandering about, and even as the Election results are NOT known yet, we don't see a catastrophe.

• Now if the Vote is Close, and neither has a landslide, and one fights it for weeks, well that is a sub-optimal situation for stocks, I'll assess if needed.

• However just by the mood today, nobody really wants that, and just based on his casual remarks, I doubt President Trump 'really' does either, seems like he does not want the Country torn apart further any way one views it.

• So yes, my inkling is (as I think the market detects) campaigning is over, that candidates don't fear each other as much as proclaimed, and that if we get the Blue Wave, we won't see it folded into a green new deal.

• That's not to say there won't be pressure for 'change' and reform, sure it's going to be there, but I suspect 'if' it's Biden, he'll opt for tradition more so than radicalism, treading lightly as everyone he knows for years advises.

• Even if we continue divided Government, the outcome may be relatively tame compared to recent ulcer-generating turmoil, due to managing the challenges of pandemic, which have been underestimated 'at times'.

• To emerge from it, besides vaccines and 'therapeutic drugs', we have to reach economic 'escape velocity', which is going to take some time.

• That time will vary upon how fast Government (even before January) will move to 'fund' the smaller biotech companies, some of which seem to see signs of life, knowing politically (or otherwise) big-pharma got the bucks.

• It's also possible (Biden or Trump), if legal slug-fests over the Election are sidestepped, we'll see rapid movement to fund stimulus, testing and new treatments (and yes we think that has to mean MAB's).

• So baited-breath and baited-breadth persist, and sure, this market is now so strong that it almost will invite profit-taking after a surge, but not a huge drop, again presuming we get a decision (at least this week).

• Yes there are other issues of concern, COVID lock-downs expanding both in the U.S. and Europe, and the 'terrorist attacks' now affirmed ordered by what remains of ISIS, as Viennese Police learned with the 2nd suspect.

• By the way CDC again contradicts delusional COVID optimists, noting that a survey now shows 'half' of all family members living in the same house as a COVID patient, will contract the disease within one week.

• So much ideas (much of Europe too) of not worrying about kids as they can shake-it-off easily, but they bring it home.. early warnings that some have tried denying, shown again to be common-sense caution.

• And the hurricane that just clobbered Nicaragua, is forecast to turn North toward Cuba, and then either the North Atlantic.. or Florida.

Finally, both candidates are pro-capitalism, presumably not pro-oligarchs (you do see bipartisan support for certain antitrust efforts), and both favor strength for our military and competitive confrontation against Chinese expansionism. I suspect that better trade prospects and even relationships with allies, will get better not worse, and that's whether it's Biden or in Trump's 2nd term. Calm.

In-sum: now the count's just starting, as I focus a bit on cohesive governance that tries to end the divisiveness (yes the comfort food for the Nation and the market by the way), and that's the Centrist approach against viciousness we have preferred candidly for the next few years, no matter who is President.

As I've mentioned, I'm sufficiently optimistic about 2021, regardless of tonight (if we even get a clear indication of a victor by simply extrapolating states that we all know are key). And sure, you could get an S&P dip between 1 and oh 4 am depending how things go, then dip and rally further, but I'm being cynical.

I do sense a 'desire' to have this over (even Trump has mused about what he might do if not in The White House, like a broadcasting career.. and I actually can clearly see that should there be such circumstances. So I'll say, 'if' we get a 'concession' by either candidate late tonight (highly unlikely as too normal it seems in an extreme partisan era, but most are tired of confrontational politics or so it seems, even if it's just for the moment) everyone will be relieved.

So 'if' there's the mathematically clear evidence, then it could happen tonight. If so I'd look for relief and a higher market and lower VIX, at least temporarily. If not well you know the bigger picture implications (shy of 'megaphone') S&P possibilities. And if any voting result triggers massive social instability, then it's the adversaries of our Republic that will consider that an achievement.

By the way, I would like to praise the American people tonight. Regardless of how the Election goes, citizens have felt it so important to participate, that it's beyond just observing the raw numbers of early and mail-in ballots. I believe it is to be commended, not criticized, that so many people, especially now in the middle of a pandemic (yes the middle, Dr. Birx is entirely correct that we're not at all emerging pending vaccines / treatments) have taken it upon themselves to participate in their civic responsibility, to vote. Congratulations America!