Daily Market Update – November 8, 2016 (Close)
Yesterday the market made it pretty clear that it didn’t like the uncertainty that they perceived with a Trump victory.
The association between the market’s sudden decline when news suggesting that there may have been more emails to be discovered and the surge when the all clear was given, was pretty undeniable.
The market views one side far more favorably than another, even as it has usually been wrong about which side to favor for the past generation or two.
This time they may be right, but not because of any individual, more because the trend is in the direction that will take the swinging pendulum of an economy over to the side of economic growth.
It was likely going to happen anyway, barring some horrible disaster or truly terrible policy decisions.
Even the lesser wanted of the 2 candidates would not likely be able to introduce such drastic policy decisions and to do so quickly enough to warrant the kind of reaction to the very thought of his victory.
I just enjoyed watching yesterday’s move higher and despite today’s seeming calm, there may be more in store tomorrow.
The question is really what happens after tomorrow?
At some point soon there has to be a realization that all signs are now for a rate hike in December, unless we get terrible retail earnings news this week.
Does the market look at that rate hike, now that it is almost guaranteed as the enemy or as a friend welcoming all into the great things that await in the economy?
Logic tells you that it should be the latter, especially at this early stage of interest rate increases.
History bears out the logic in using logic, but no one knows if the market will see it that way.
It did for a brief moment or two this time last year, but then may have gotten spooked by the thought of even more rate increases that never came.
That’s where this time around may be different.
Employment is higher and wages are moving higher. With evidence of GDP growth the time may finally be here for a series of rate hikes and at some point it will become burdensome.
That’s what a pendulum is all about.
Today the pendulum just kept swinging a little more, but those early election results are going to have to change if the pendulum is to keep moving in that direction.
This is one case that I don’t expect an immediate sell on the news in the event of the expected outcome.
It’s the unexpected that should always be frightening, though.