Hurrah!!!!!! The election is here at last, and it will be all over today. Markets love certainty, and the election provided an unwanted level of uncertainty in the financial markets. My interpretation of the numbers today, is that the markets all turned today, and will be looking different in the future. But, how will the look?? We’ll see, and I’ll talk about it. Let’s look at what happened today.
Stocks were up as much as 300 points during the day, and ended up 179 points. This is a steady increase in stock values over the past week. Does this mean that the markets love to have Obama win? - the apparent winner according to the news. Let’s look at the historic truth of stock markets. Stocks markets have done better under Democratic Presidents, than under Republican Presidents, over the past 30 years. Is that statistically significant? I don’t think so, but stock betters don’t really care – they just place their bets, and wait to cash in their chips. The counter to stock being at a turning point is the recession that we are falling into. How could stock prices reflect one year’s worth of lost revenues, and still go up? We’ll see.
Bonds rallied too!!!! I find that amazing – and it is counter-intuitive. I will be watching this phenomenon over the next few days to try to understand it. I don’t understand it today. LIBOR was the lowest that it has been since last June. In other words – it’s back to normal. This is great news, and could be one of the elements in understanding the bond phenomenon.
The Dollar fell significantly against all currencies (except the Yen), and this could be a major turning point for the Dollar – has it reached its peak?
Oil rose 11% today – imagine that 11% in just one day. Hard to believe, but it’s true. This could also be the turning point for oil prices. Has Oil reached its low price? We’ll see. Gasoline is still low at less than $1.50/gallon at the refinery. You pump price should be $1.90 today, but it isn’t of course.
Gold rose $31 today, and could also be a measure of the turning point for gold from its near term lows. We’ll see.
Food for Thought Tonight……
Here is an interesting article that reflects on our economic system. Please read it, and try to comprehend its purposeful meaning. The article is written by Kevin Depew of Minyanville.
“You can build a hamburger with one ingredient, ground beef, or you can use 100, but in the end it is still just a hamburger. Our credit system has 100s of ingredients these days, but it’s still just a hamburger… one that has been doctored up with all of these fancy ingredients…The word credit comes from the Latin “credere”, which means, literally, “to believe, or to trust.”…When the “credere” is gone, the whole thing unravels, and it works both ways, from lender to borrower, and from borrower to lender. This is why monetary and fiscal policies are not working…Credit is nothing but a belief. That belief, “credere”, stretched to its limits by the policies of endless credit expansion, was weakened to such an extent that it has developed what may be likened to an autoimmune disorder, a condition where the immune system mistakenly attacks itself, destroying even healthy body tissue in the process…Under normal circumstances, without excessive credit expansion policies, the system’s immunity defenses would attack and destroy the toxic substances - such as subprime mortgages - and leave the healthy tissue alone. However, the system now has turned on itself and is attacking healthy body tissues and toxins because it can no longer distinguish between the two…Unfortunately, autoimmune disorder often results in the destruction of the body itself (the financial system), or abnormal growth of an organ (government and regulation) and/or changes in an organ’s function (the banking system). At this point, we have no idea what the outcome will be, but I think our doctors (policymakers) are dramatically underestimating the disease.”
Here are Yesterday’s numbers:
Dow Jones 30 Industrial - 9499 (up 179 points)
10 Year Treasury Bond – 3.75% (down 0.16%)
Euro - $1.2948
Gold - $757 (up $31)
Oil - $71.50 (up $7.59)
Gasoline - $1.49 (up $0.13)
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