The economic calendar is crowded this week.  It is filled with top tier indicators that will offer insight into the strength of the economy.  Perhaps September’s labor report released on Friday is the most significant report that will be issued before the election.  The odds are great the data will be politicized.

Speaking of politics, will volatility increase as election day nears?  Many are suggesting the outcome will not be clear thus suggesting a protracted legal battle.    In my view if this happens the potential for political and societal chaos rises and the prolonged uncertainty may be a bigger risk than the person who actually wins.

I vividly recall 2000.  The S & P 500 fell about 4%, Treasury yields fell and gold prices soared about 12%.

Goldman writes that a delayed outcome is only a “tail risk” and not the most likely outcome, a similar view I expressed last week.  With this written, however, hedging is becoming more expensive in November than October and prices are creeping higher for December.

And then there is tomorrow’s debate.  I am certain there will be an infinite number of interpretations.  Will there be a momentous remark/gesture that will be remembered into eternity?

Commenting on Friday’s activity, led by the techs, equities advanced as dip buyers appeared after the market slide, tempering concern over a cloudy outlook for a stimulus package. Most other markets were relatively flat.

What will happen today?

Last night the foreign markets were up.   London was 1.33%, Paris up 1.94% and Frankfurt up 2.65%.  China was down 0.06%, Japan up 1.32% and Hang Sang up 1.04%.

The Dow should open moderately higher following a strong European showing.   The 10-year is off 5/32 to yield 0.68%.


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