10 Sep A MIXED DAY
Led by gains in the financial and energy sectors, equities were generally mixed. Perhaps a major question that could soon arise is how the markets view the 2020 election. At this juncture it is viewed as nothing other than a side show where freaky things are said and done.
A strong argument can be made that if or when the markets begin taking four out of five leading Democratic Presidential candidates seriously, volatility could greatly rise. Eighty percent of the leading candidates are proposing radical changes for the American economy. In my view the proposals would make 2008-09 as an insignificant event.
Perhaps the proposed changes in the energy markets are an easy example to make my point. Eighty percent of the candidates would make fracking illegal. The US is now the world’s largest single country oil exporter. The crippling macroeconomic impact of banning oil exploration and production would be exponential.
Cynically speaking maybe that is why oil and natural gas was up over 2.5% yesterday…the curbing of supplies via regulatory fiat. Probably not but in today’s era of where the most absurd is viewed as gospel, it sounds appropriate.
Contrary to prevailing wisdom, Democracy is all about special interests. I shudder every time I hear a candidate proposes taking special interests out of politics. Those who make this statement are either ignorant or arrogant. I do not know which one is worse.
To make my point I will digress and talk about Alexander Hamilton, a founding father and first Secretary of the Treasury under President Washington. Before Hamilton became Treasury Secretary, he bought millions of dollars of Revolutionary War debt at pennies on the dollar. Once he became Treasury Secretary he convinced the Continental Congress that the US must completely honor its debt at 100 cents on the dollar.
Hamilton made millions.
OK some would say he got what he was due following his dueling death at the hands VP Arron Burr but that is a different story. [OK maybe the rancor in American politics is not as bad as it was 215 years ago…the duel was about sex and the Electoral College]
What will happen today? Will the selloff in megatech and health care continue, the result of fears of a regulatory onslaught from both the left and the right? Treasuries also sold off.
Last night the foreign markets were mixed. London was down 0.02%, Paris down 0.19% and Frankfurt up 0.24%. China was down 0.12%, Japan up 0.35% and Hang Snag up 0.01%.
The Dow should open nominally lower. The 10-year is unchanged at 1.64%.