Nervousness is rising in many dimensions.  The markets are beginning to discount the possibility that Elizabeth Warren could become the Democratic nominee given the issues surrounding both VP Biden and Senator Sanders.

If elected, Congressional adoption of her proposals would radically change the face American capitalism, a change that would make 2008-09 as an insignificant event.  Markets hate uncertainty and the possibility of her nomination is stoking fear from Silicon Valley to Wall Street to K Street.

I do not think society is as far left as Warren thus suggesting her nomination would ensure a Trump reelection.

However the President is facing his well-known issues.  Will the commoner turn on the President?

I am not a conspiratorialist but I don’t think it is an embellishment to write the vast majority of press about the President is negative.  The Establishment-defined as the media, most in government regardless of party affiliation, and big business—has little regard for the President.

I ask what would be the impact on Senator Warren if the Establishment turned on her and she fell under the same scrutiny as the President?  As indicated above, her policy proposals are a direct threat to Silicon Valley, Wall Street, K Street, the pharmaceutical and health industry.  There is no interest like self-interest.

Nominally changing topics, yesterday the BLS stated for the first time in history the average American spends more on taxes than on combined heath, food, clothing, electricity and phone expenditures.  In other words, taxes are greater than spending on essential goods and services.  Wow!

It is widely accepted that Senator Warren’s proposals would greatly increase everyone’s tax burdens as well as cost of goods sold.

If she becomes the nominee much less President, I think the recessionary narrative would go ballistic.

Speaking about the recessionary narrative, the Private Sector ADP Employment report was nominally lower than expectations…135,000 versus the 140,000 estimate.  Moreover August’s data was revised lower to more closely correlate with August’s BLS report.  Such a revision was expected.

This data is not recessionary but instead suggests businesses—especially small businesses—are becoming more cautious in hiring.

Equities took their que off of the ADP data and traded lower about 1.5%. Treasuries were nominally higher.

Last night the foreign markets were mixed. London was down 0.40%, Paris up 0.70% and Frankfurt down 2.76%.  China was down 0.92%, Japan down 2.01% and Hang Sang up 0.26%.

The Dow should open nominally higher ahead of the ISM non-manufacturing data and tomorrow’s BLS labor statistics.  The 10-year is up 6/32 to yield 1.58%.


The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. The material provided in Daily Market Commentaries or on this website should be used for informational purposes only and in no way should be relied upon for financial advice. Please be sure to consult your own financial advisor when making decisions regarding your financial management. Members of FINRA and SIPC, Capitol Securities Management is a privately owned full-service retail brokerage and investment advisory firm headquartered in Richmond, Virginia. For nearly 30 years, we have been serving the needs of our investors. Today, more than 200 Capitol Securities Management investment professionals and support staff serve approximately 18,000 customer accounts from Southern Florida to the New England coast.