This Calm Shall Pass, Too

Equity futures buckled a bit after the first congressional race was called for the Democrats – early, and with a wide margin that maybe said this “blue wave” was real.

As more results came in, futures recovered ground, steadied, and started to point to a positive open.

After all, what happened was basically in line with expectations. Democrats did take control of the House of Representatives, and that presents a challenge to President Trump.

But he’ll respond as he’s always responded, and that means a lot of unpredictability from the Commander-in-Chief of the most powerful nation on the planet.

I, for one, am ready for whatever he stirs up; indeed, Trump plus “normalization” by the Federal Reserve could translate into a lot of volatility in the U.S. Treasury market.

And we’re prepared to profit from it.

It’s Like the Eye of a Storm…

It’s actually a little quieter this “morning after” than I’d anticipated. Indeed, stocks are well into positive territory, and bond yields continue along this still-new uptrend.

It certainly stands in stark contrast to the run-in to the midterms, including last Monday’s 900-point intraday swing for the Dow Jones Industrial Average.

By Friday, however, stocks had come well off those lows. And the release of the October employment report by the Bureau of Labor Statistics (BLS) added additional fuel to the “strong economy” narrative.

At the same time, those fresh BLS numbers support the Federal Reserve’s current policy track, so another rate hike in December is a near-certainty.

I guess we can forget about September’s paltry gain of 134,000 new non-farm jobs. That dud drove expectations for October down to 190,000, but this economy created 250,000.

It’s an all-around winner: Private payrolls increased by 246,000 versus a forecast of 181,000, and manufacturing jobs grew by 32,000 against an expectation of 13,000.

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