Make America Great Again

The result of the US election will have monstrously big implications for the US and wider world. If Trump wins, it'll be a shock of biblical proportions to the mainstream. If crooked Hillary wins, little would change in the short term, but long term prospects for the world economy and societal peace, would unquestionably deteriorate.

Trump - Oct'30th 2016, screenshot - via RSBN Youtube feed

Not on the fence

I've posted here on the US/world capital markets since early 2012, and have almost entirely managed to refrain from anything directly political, not least because that is not what these pages are for.

Yet, the current election is arguably so very important, and today's post will be an exception. More than anything, I wanted to at least give my own best guess as to the result.

As someone from the other side of the pond, I think I can at least offer something a little more balanced than the usual 'conservative vs liberal' viewpoint. Besides, those terms have somewhat different meanings in the UK.


Forming a best guess/projection

In coming to form an estimate of how the result might go, lets first consider the 2012 result, where Obama won a second term with 332 electoral college votes against Romney's 206. 

Here is the issue that even most democrats should be able to agree on, Clinton is not as favoured as Obama.

So... a basic assumption is that Clinton won't do better than the 2012 result. By definition, most.. if not all, of the states that Romney won, should be maintained by Trump.


The easiest states to win

With a review of the data @ wikipedia

If Trump can pick up just four extra states: FL, OH, VA, and CO, he will achieve a marginal victory.

My conservative 'best guess'...

I've watched most of the Trump rallies, of which there have been over a hundred across the past year.

I've come to believe Trump will win Michigan (MI), a state inherently leaning toward the  democrats. Michigan is the ultimate example of how the US economy has changed. NAFTA has lead to huge job losses since the 1990s, with large scale destruction of core manufacturing that once made America great.

For Trump to win MI, he needs a swing of 9.5%. That is a lot, but its not unheard of in the modern political world.

The grander point is... if MI does fall to Trump, so should most of the other states.

My best guess is for Trump 351, with Clinton 187

The above of course would be an absolutely wild outcome, one that would shock the mainstream, and indeed, the US/world capital markets.

Am I just being overly hopeful? Am I wrong in thinking that the American people do understand that the real economy hasn't actually improved since late 2008? They know their pay hasn't gone up for the better part of almost two decades, yes?

Sure, the equity market has soared to new historic highs, but the real economy (especially when factoring OUT the QE), is little better than when Bush left office.

Industrial/resource states like MI, OH, PA, and VA should be especially supportive of Trump.

Perhaps the best example of the real difference between the two candidates are the frequent banners of 'Trump digs coal', whilst Clinton has long stated her aim to put the miners out of business.
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Do you have a better guess? To create your own best guess for the election result, visit http://www.270towin.com/ , click some states, take a screenshot, and post it up!
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If Clinton wins

Its a somewhat scary thought, even for someone not living in the USA, but a victory for crooked Hillary Clinton has to be considered. Any scale of victory would be a mid/long term disaster for the US and wider world. By definition, a Clinton presidency would merely be a slightly more feminine version of the past 7 years.

Should we expect fiery nuclear obliteration? Clinton sure seems a little war hungry, especially with Russia. Far from being concerned about 'temperamental Trump' in charge of the US nuclear arsenal, I'm genuinely worried about Clinton having the opportunity to turn much of the northern hemisphere to glass.

There are many issues surrounding Clinton of course, not least those of health and the infamous emails. There is Benghazi, but there is nothing to be added on that debacle, that a million other writers haven't already covered. A women president would be great....  just not that one.


The dark horse

When Trump announced his candidacy for president in June 2015, most dismissed it as a mere publicity stunt. Yet.. it wasn't. Not only did Trump win every single one of the republican primary debates, but he comfortably held his own against the political master that is Clinton, in the three presidential debates.

Watching the rallies has been pretty amazing. Many rallies were held in hangers next to a runway, and if you had your own jet, wouldn't that be what you'd do too ?

The alternative media have really shown their power in this election. On youtube, Right Side Broadcasting (RSBN) see: RSBN @ youtube, have been leading the charge for Trump. (Hello Wayne Dupree, love your shows!).

Its pretty bizarre that even now, many in the mainstream media are still largely dismissive of Trump. Is it just mass psychological denial, wilful lies, or a bit of both? Regardless of what the mainstream media are saying though, it no longer matters, as there is an increasingly good alternative.

Trump's acceptance speech at the republican convention in July was good, but the more recent address at Gettysburg was far more important, as Trump gave a good outline of where he wants to steer the US.


*Trump begins speaking at t+10



Trump, the dark horse... that few saw coming, but is set to achieve the ultimate political prize.


Drinks and chocolates on standby

Yours truly will indeed hope for a 'shock' Trump victory tomorrow night. I'll be curious to see if Trump can get close to the 351 electoral college votes that I believe he can achieve. Frankly though, I'll be delighted with any marginal victory.

The most powerful nation in the world has a big decision to make. I shall hope the US populace take a chance, and vote for someone who is not part of the establishment, and who can't be bought by lobbyists.

Dark Horse... standing by

I do sincerely understand why some of you out there, will instead be cheering on Clinton this Tuesday, I can only add, I just don't see another 4-8 years of Obama-style leadership/policy as a good thing.

As ever, feel free to leave a comment via DISQUS, along with your own 'best guess' for the election result.

yours... a distant onlooker from the eastern side of the Atlantic

Goodnight from London
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**the next post on this page will likely appear no earlier than Wed' 7pm EST.

Pre-election bounce

US equity indexes closed powerfully higher, sp +46pts @ 2131. The two leaders - Trans/R2K, settled higher by 3.1% and 2.5% respectively. VIX settled -16.9% @ 18.71. Near term outlook offers pre-election price chop, before renewed downside... regardless of who wins the US presidency.


sp'daily5

VIX'daily3

Summary

*its a kooky thought, that the sp'500 is a mere 62pts (2.9%) from the Aug' historic highs.
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After 9 consecutive days of declines, the sp'500 has powerfully rebounded, with one of the strongest gains in some months.

Volatility has naturally been crushed, although relative to the past few months, the VIX is still elevated, as the uncertainty of an election result remains.

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*A special US election post will appear Mon @ 8pm EST. The next market post on these pages will likely not appear until Wed' 7pm EST.

Weekend update - World monthly indexes

It was a broadly bullish month for world equity indexes, with net changes ranging from +11.2% (Brazil), +4.1% (Spain), +1.5% (Germany), -0.9% (USA - Dow), to -2.2% (Australia). Near term outlook threatens some 'election inspired' turmoil. How November settles will be extremely important, in whether the upward trend from Jan/Feb' remains intact.


Lets take our monthly look at ten of the world markets

USA - Dow

The mighty Dow settled lower for a third consecutive month, -165.66pts (0.9%), at 18142. It is highly notable that underlying MACD (green bar histogram) cycle, which was positive across Aug-Oct', has turned negative. Such a failure around the zero threshold is rather bearish.

Best guess: short term weakness to the 17600/500s, before a whipsaw back upward into end month.. at least to 18200.

Clearly, with the fed set to raise rates Dec'14th, the next big threshold of 19k looks out of range until early next year.

Alarm bells should sound on any weekly close <17600, which would be decisively under the 200dma, the lower weekly bollinger, and also the monthly 10MA.
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Germany - DAX

The economic powerhouse of the EU - Germany, saw the DAX settle +153.99pts (1.5%) at 10665. Underlying price momentum is stalling, stuck under resistance of 11k. Rising support is currently in the 9500s. Any price action <9500 would offer a swift fall to the Oct'2014 low in the 8300s. Things would turn exceptionally bearish on any monthly close <8k.


Japan

The BoJ fueled Nikkei settled +975pts (5.9%) at 17425, above the 10MA for the first time since Dec'2015. It is notable that so far this month, the Nikkei is getting stuck around declining trend/resistance, that stretches back to the June 2015 high. A failure at this level would be a serious problem. Equity bulls should be battling for a year end close >18k.


China

The Shanghai comp' gained a rather significant 95pts (3.2%), settling at 3100, the best monthly close since Dec'2015. Underlying price momentum continues to swing back toward the equity bulls. At the current rate, there will be a bullish MACD cross at the start of Jan'2017. First big upside target is the 4000/4200 zone, and then the summer 2015 high of 5178.


Brazil

The Bovespa saw an exceptionally bullish month, settling higher for a fifth consecutive month, +6557pts (11.2%), at 64924. This was a clear breakout above declining trend/resistance, that stretches all the way back to May 2008. The breakout is only negated on price action back under the rising 10MA.. currently in the 54000s. On balance, a move to challenge the May'2008 historic high of 73920 looks probable. Talk of an 'inflationary' 100k can begin.


Russia

The Russian market saw a month of very narrow range trading, settling -1pt (0.1%) at 989. The 1K threshold is naturally strong resistance, as the RTSI has rallied from the Jan' low of 607. Recent weakness in oil/gas prices has been especially problematic for Russian equities, and if we're to see a monthly close >1K, energy prices will have to claw back upward.


UK - FTSE

The FTSE climbed 54pts (0.8%), settling at 6954. The October candle was pretty spiky, as the FTSE is still unable to break/hold the multi-decade resistance of 7K. Current weakness to the 6600s should concern the bulls, although things really only turn provisionally bearish with a break back under the 10MA.. currently in the 6500s.

The ongoing BREXIT chatter is not helping the UK market. This week's court ruling that the UK parliament should first meet before invoking the exit clause, could drag this out to the point where the UK just doesn't exit.

Further, its notable that the BoE have upgraded their inflation projections for 2017. Most now expect inflation of around 4% by late 2017.. at a time when the UK could well be in recession.


France

The CAC climbed 61pts (1.4%) in October, settling @ 4509. Underlying price momentum is threatening to stall. Things will turn provisionally bearish with <4200. As of the start of 2017, rising trend - that stretches back to the Sept'2011 low, will be around 4100. Any price action <4k would be extremely bearish.


Spain

The IBEX climbed for the fourth consecutive month, settling +363pts (4.1%), at 9143, the best close since Dec'2015. With the declining trend from summer 2015 broken a few months ago, the broader outlook for the Spanish market remains bullish. That view is only negated on a move <8K, which is around 10% lower.


Australia

The Australian market was the laggard this month, with a net decline of -122pts (2.2%), settling at 5402. Ongoing price action so far this November remains weak, with the 5000/4900 zone now looking viable within the near term.
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Summary

November has started on a broadly bearish note, with many markets lower by around -3%.

Most world markets are still holding within their broader upward trends, some of which now stretch back a full five years.

The US market is struggling, due to some natural anxiety ahead of the election result.

It will be important to see the majority of world markets settle November flat/moderately higher, as any stalling in price momentum would threaten significant weakness into year end.


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Looking ahead

The week will of course center not around any particular corporate earnings report, nor even any econ-data point. Instead, the market.. and the world, will be focused on the result of the US election. Barring a messy tie, the result should become clear by 2am EST.

M - consumer credit
T - -
W - the US and the world react to the result of the US election

data: wholesale trade, EIA report.
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T - weekly jobs, US treasury budget
F - consumer sentiment.

*there is a light sprinkling of fed officials, notably, Bullard, due early Thursday.
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Have a good weekend
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*the next post on this page will appear Monday @ 7pm EST.