Polymarket shows 54% probability election decided by Wed evening... positive "market surprise." Stocks rally into YE regardless of winner Array ( [cookie] => d05981-6e728c-03b2f9-0e4fc6-a4f645 [current_usage] => 1 [max_usage] => 2 [current_usage_crypto] => 1 [max_usage_crypto] => 2 [lock] => [message] => [error] => [active_member] => 0 [subscriber] => 0 [role] => [visitor_id] => 11905 [user_id] => [reason] => Usage under limits [method] => ) 1 and can accesss 1

VIDEO: We wanted to provide you the fundamental rationale why stocks rally with either candidate winning (duration: 5:18).

Polls close Tuesday evening and investors now wait to see who is elected our next President and Congress. Media outlets are predicting an election outcome will take some time and similarly, investors are largely expecting the outcome to take several days:

• Polymarket.com offers a wager “When will AP (Associated Press) call the election”?
  – this is an interesting bet
  – Tue 11/5 18%
  – Wed 11/6 46%
  – Thu 11/7 17%
  – Fri 11/8 8%
  – etc 11%
• This is interesting as 54% are betting on an election decision within the next 24 hours. And media outlets like NBC.com are warning that a decision might be delayed for some time. And many harken this to 2000 when the election was not declared until more than a month later in December.
• One possible explanation is betting markets see a “landslide” winner.
  – plenty see a Harris landslide –> one example
  – plenty see a Trump landslide –> one example
• Perhaps the surprise for markets is a “landslide” winner that is declared within the next 24 hours. This would be a positive for financial markets, removing the uncertainty that overhangs a delayed election outcome. And the VIX would similarly fall, further supporting upside for markets which is currently at 20.5
• Personally, I would be surprised. But then again, a lot of things this election cycle have surprised me. So, we will soon find out. And the VIX term structure has “uninverted” and now the 4M contract is lower than the 1M contract.
• In any case, we expect stocks to finish strong into YE regardless of either candidate. Why? Consider this rationale.
• If Harris wins:
  – continuation of existing policies
  – fiscally loose spending
  – Technology + Healthcare
• If Trump wins
  – lower taxes, end of SALT deduction cap
  – “animal spirits” as de-regulation drives M&A
  – strong US corporate relative position vs rest of world
• There are fundamental rationale for stocks to rally either way.
• This is supported by historical precedent, consider this:
  – since 1900, 31 elections
  – 3M/win ratio post-election: +5.5%/61%
  – if no recession (n=13): +5.9%/77%
  – if markets down into election (n=6): +3.7%/67%
  – if BOTH no recession and down (n=1): +7.2%/100%
• See the picture? Equities do well into year-end regardless.
  – the only question is the near term path
  – contested election likely means near-term downside

BOTTOM LINE: This is a strong market

Bottom line. We are glad the election is finally here. This remains a strong market. So stay on target.

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42 SMID Granny Shot Ideas: We performed our quarterly rebalance on 7/16. Full stock list here -> Click here

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Key incoming data November:

• 11/1 8:30 AM ET: Oct Non-Farm Payrolls Tame
• 11/1 9:45 AM ET: Oct F S&P Global Manufacturing PMI Tame
• 11/1 10:00 AM ET: Oct ISM Manufacturing PMI Tame
• 11/4 10:00 AM ET: Sep F Durable Goods Orders Tame
• 11/5: US Presidential Election 2024
• 11/5 8:30 AM ET: Sep Trade Balance Tame
• 11/5 9:45 AM ET: Oct F S&P Global Services PMI Tame
• 11/5 10:00 AM ET: Oct ISM Services PMI Mixed
• 11/7 8:30 AM ET: 3Q P Non-Farm Productivity
• 11/7 8:30 AM ET: 3Q P Unit Labor Costs
• 11/7 9:00 AM ET: Sep F Manheim Used vehicle index
• 11/7 2:00 PM ET: Nov FOMC Decision
• 11/8 10:00 AM ET: Nov P U. Mich. Sentiment and Inflation Expectation
• 11/12 6:00 AM ET: Oct Small Business Optimism Survey
• 11/12 11:00 AM ET: Oct NY Fed 1yr Inf Exp
• 11/13 8:30 AM ET: Oct CPI
• 11/14 8:30 AM ET: Oct PPI
• 11/15 8:30 AM ET: Oct Retail Sales Data
• 11/15 8:30 AM ET: Nov Empire Manufacturing Survey
• 11/18 10:00 AM ET: Nov NAHB Housing Market Index
• 11/18 4:00 PM ET: Sep Net TIC Flows
• 11/19 9:00 AM ET: Oct M Manheim Used vehicle index
• 11/21 8:30 AM ET: Nov Philly Fed Business Outlook
• 11/21 10:00 AM ET: Oct Existing Home Sales
• 11/22 9:45 AM ET: Nov P S&P Global Manufacturing PMI
• 11/22 9:45 AM ET: Nov P S&P Global Services PMI
• 11/22 10:00 AM ET: Nov F U. Mich. Sentiment and Inflation Expectation
• 11/25 8:30 AM ET: Oct Chicago Fed Nat Activity Index
• 11/25 10:30 AM ET: Nov Dallas Fed Manuf. Activity Survey
• 11/26 9:00 AM ET: Sep S&P CoreLogic CS home price
• 11/26 10:00 AM ET: Nov Conference Board Consumer Confidence
• 11/26 10:00 AM ET: Oct New Home Sales
• 11/26 2:00 PM ET: Nov FOMC Meeting Minutes
• 11/27 8:30 AM ET: Oct PCE Deflator
• 11/27 8:30 AM ET: 3Q S 2024 GDP
• 11/27 10:00 AM ET: Oct P Durable Goods Orders

Key incoming data October:

• 10/1 9:45 AM ET: Sep F S&P Global Manufacturing PMI Tame
• 10/1 10:00 AM ET: Sep ISM Manufacturing PMI Tame
• 10/1 10:00 AM ET: Aug JOLTS Job Openings Tame
• 10/3 9:45 AM ET: Sep F S&P Global Services PMI Tame
• 10/3 10:00 AM ET: Sep ISM Services PMI Mixed
• 10/3 10:00 AM ET: Aug F Durable Goods Orders Tame
• 10/4 8:30 AM ET: Sep Non-Farm Payrolls Hot
• 10/7 9:00 AM ET: Aug F Manheim Used Vehicle Index Tame
• 10/8 6:00 AM ET: Sep Small Business Optimism Survey Tame
• 10/8 8:30 AM ET: Aug Trade Balance Tame
• 10/9 2:00 PM ET: Sep 18 FOMC Meeting Minutes Dovish
• 10/10 8:30 AM ET: Sep CPI Hot
• 10/11 8:30 AM ET: Sep PPI Tame
• 10/11 10:00 AM ET: Oct P U. Mich. Sentiment and Inflation Expectation Tame
• 10/15 8:30 AM ET: Oct Empire Manufacturing Survey Tame
• 10/15 11:00 AM ET: Sep NY Fed 1yr Inf Exp Tame
• 10/17 8:30 AM ET: Sep Retail Sales Data Tame
• 10/17 8:30 AM ET: Oct Philly Fed Business Outlook Tame
• 10/17 9:00 AM ET: Sep M Manheim Used Vehicle Index Tame
• 10/17 10:00 AM ET: Oct NAHB Housing Market Index Tame
• 10/17 4:00 PM ET: Aug Net TIC Flows Tame
• 10/23 10:00 AM ET: Sep Existing Home Sales Tame
• 10/23 2:00 PM ET: Oct Fed Releases Beige Book Dovish
• 10/24 8:30 AM ET: Sep Chicago Fed Nat Activity Index Tame
• 10/24 9:45 AM ET: Oct P S&P Global Manufacturing PMI Tame
• 10/24 9:45 AM ET: Oct P S&P Global Services PMI Tame
• 10/24 10:00 AM ET: Sep New Home Sales Tame
• 10/25 10:00 AM ET: Oct F U. Mich. Sentiment and Inflation Expectation Tame
• 10/25 10:00 AM ET: Aug F Durable Goods Orders Tame
• 10/28 10:30 AM ET: Oct Dallas Fed Manuf. Activity Survey Tame
• 10/29 9:00 AM ET: Aug S&P CoreLogic CS home price Tame
• 10/29 10:00 AM ET: Oct Conference Board Consumer Confidence Tame
• 10/29 10:00 AM ET: Sep JOLTS Job Openings Tame
• 10/30 8:30 AM ET: 3Q A 2024 GDP Tame
• 10/30 10:00 AM ET: 3Q24 Treasury Quarterly Refunding Press Conference Tame
• 10/31 8:30 AM ET: Sep PCE Deflator Tame
• 10/31 8:30 AM ET: 3Q Employment Cost Index Tame

Economic Data Performance Tracker 2024:

Economic Data Performance Tracker 2023: