A Day When the Long-Term Starts to Unfold
The early markets have everyone’s attention this morning, lots of excitement on CNBC. For us it will probably be a day to watch, maybe reread what we said in the Inflation/Deflation 9/30/12 post on the Main Site. The risk for the market is that the S&P closes under the 1419 level today, i.e., the market got trapped in the 1419 to 1489 S&P trap and will now be put in quarantine.
A lot of factors are involved here, maybe listing a few will provide perspective:
1) The market always needs a short-term factor to talk about, and that is probably earnings today.
2) For me the real factor is the election unfolding and the appearance that Romney will be the winner. I have said it, what seems like a million times on this site, and the supply-siders will never get it, trickle down economics has to by definition increase deficits and scare the hell of of world t-bond buyers, thereby increasing interest rates and eventually creating a real Great Depression, nothing like the Great Recession we saw a couple of years ago.
3) So the middle class is voting for their execution, pretty dumb. On the other hand, tools exist for individuals to handle the situation by positioning their assets for what could entail, even including hedging the value of one’s house in an asset/commodity market like copper or lumber.