Election is in the Headlights

How this election goes will have a big effect on stock selection.

We all know the FED is determined to keep pressure on the overall market, even proprietors of antique shops are talking about recession, as my wife and I found in a little research into downsizing on an outing this past weekend.

As all of you know I have been sticking to my Climate Change theme in stock selection. In the attached table below you can see that since commodity prices peaked on June 6th, our selection model has done reasonably well, with Biotech at the top and the overall sector EPCC that consists of Biotech, Solar, EV, and Chips coming in number 11 out of 27. The Chips and EV sectors have performed the poorest, bringing the average down. My belief is that if the Dem’s hold onto the Senate and House, that the EPCC portfolio will shine.

On the other hand, if the Republicans get control of Congress, Climate Change initiatives will probably be difficult to pass and we may see relative performance somewhat like what we have seen since the retest of the bottom on October 14, with money flowing into the crap sectors, like T&E and other light weight consumer places.

So, lets watch the results tonight.

I have decided to hold off the post of the FED Balance Sheet study until a few days after the election results settle. The main takeaway at first glance of the numbers is that bonds and stocks are down much more than expected versus a very small decrease in the Fed Balance Sheet. Meaning the action so far in the markets is based primarily on Fed rhetoric and associated activity of the bond vigilantes. This will make the next 3 months especially interesting as there is a lot of slack in the markets.

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