24 Oct IS THE TARIQ AZIZ SYNDROME OCCCURRING?
The election is two weeks away. Many believe Hillary Clinton will be the forty fifth president. There is also a growing minority opining there may be a Brexit like surprise given the many similarities.
To refresh, Brexit eve the polls suggested it would fail between 5% and 7%. It passed overwhelmingly the result of the political, media and business establishment misjudging the mood of society.
I ask however did the establishment misjudge the mood or was the establishment suffering from the Tariq Aziz syndrome, the infamous Iraqi foreign minister who stated the Americans are nowhere near the Bagdad airport as American armor passed in the background, the classic case of believe what I say not what you see or feel?
As noted many times, a record 76% believe the country is going in the wrong direction. There is a record 14% gap as to what candidate would be best for the economy. Only 9% of society has a favorable view of congress, also a record low. And then there is the media where only 10% think they are accurate and unbiased. And then there is the democratic candidate where only 11% thinks she is “honest and trustworthy.”
Against this backdrop, perhaps the political, media and business establishment is suffering from the Tariq Aziz syndrome.
We will know on November 9.
Volume in the market has been anemic. The WSJ writes daily activity since October 10 in 19% below its 2016 average. Is the dearth of activity the result of the election? Wall Street thinks there is only an 18% chance Trump will be elected. Is it because of earnings and interest rates? These variables are always present.
Or can I suggest all are exhausted from the last several years where reality has uncoupled from fundamentals where the big just bigger and the small has little interest. But I think it is noteworthy the best performing equity asset sector has been small cap value, a sector that no one owns, where any buying will boost prices.
What will happen this week? Earnings may dominate the headlines as over 200 S & P 500 companies post results. The economic calendar consists of various housing statistics, the trade gap, the first print of third quarter GDP, and durable good orders.
Last night the foreign markets were up. London was up 0.15%, Paris up 0.81% and Frankfurt up 0.89%. China was up 0.86%, Japan up 0.29%and Hang Sang up 0.98%.
The Dow should open moderately higher on several high profile mergers. Bloomberg writes the S & P 500 has been stuck in a 64 point trading range since early August. The 10-year is unchanged at 1.74%.