It’s All about the U.S. Election Today

November 8, 2016

Today will be a day for biting nails and watching the voting returns. Final opinion polls only gave Clinton a very narrow popular vote lead. Impossible to underestimate how much lies at stake.

While yesterday was a sigh of relief for the market, today’s mood among investors is one more anxious and guarded.

  • Gold is 0.2% firmer.
  • WTI oil dipped 0.1%.
  • The Mexican peso has slipped slightly, trimming its prior recovery.
  • European stocks have fallen 0.4% in Spain, 0.3% in Italy, 0.2% in Germany and 0.1% in France and Britain.
  • The dollar has risen 0.4% against the Australian and New Zealand monies, 0.3% relative to the yen, 0.2% against the Swissie and 0.1% vis-a-vis sterling and the yuan and loonie. EUR/USD is unchanged.
  • Equities in the Pacific Rim closed up 1.6% in Indonesia, 0.7% in Singapore, 0.6% in Hong Kong, 0.5% in China and India, 0.3% in Hong Kong and South Korea, 0.2% in New Zealand and 0.1% in Australia.
  • But Japan’s Nikkei was unchanged, and futures suggest a lower open in the United States.
  • The 10-year German bund and Japanese JGB yields slipped a basis point.

China’s trade surplus widened to a 2-month high of $49.1 billion in October from $42.0 billion in September. However, exports recorded another larger on-year decline of 7.3%, the second largest decline since the leap month of February.

Japanese international reserves tumbled $17.4 billion in October but were still $9.6 billion greater than the end-2015 level.

Japan’s index of leading economic indicators fell to a 2-month low in September, and the trend in the index of coincident economic indicators was assessed to be “weakening” for the seventeenth month in a row.

The National Australia Bank reported declines of two points each in October of its measures of Australian business confidence and business conditions. They were at 3-month lows.

The U.S. small business sentiment index compiled by NFIB improved 0.8 points to a reading of 94.9 in October, which constitutes the best score since December 2015.

The U.S. labor market conditions index, compiled by the Federal Reserve, increased 0.7 points in October following marginal dips in the prior two months and a 1.5 point increase in July. October’s reading was still considerably less than the 2015 average monthly rise.

British same-store sales recorded stronger on-year growth in October of 1.7% than in any of the prior five months.

British industrial production fell 0.4% in September, unexpectedly matching August’s drop. Output was only 0.3% above the year-earlier level. In the third quarter, production dropped 0.5% below the 2Q average and was up 1.0% from a year earlier. Analysts had predicted September production would be flat.

After a strong 3% rise in August, German industrial production fell back 1.8%, much more so than predicted, and that left production just 1.2% higher than a year earlier. Production rose 0.3% for the quarter following a 0.8% quarterly decline in the second quarter.

The German current account surplus printed at EUR 24.0 billion in September, lifting the year-to-date surplus to EUR 198 billion, 9.8% wider than during the first nine months of 2015. The seasonally adjusted trade surplus was EUR 21.3 billion in September, similar to August’s EUR 21.6 billion and the monthly mean in the third quarter of EUR 20.9 billion. However, seasonally adjusted exports and imports recorded month on month declines of 0.7% and 0.5% in September.

The French trade surplus of EUR 4.77 billion in September was EUR 1.1 billion wider than a year earlier as exports fell 2.2% on month. France also recorded a EUR 3.4 billion current account shortfall in September.

Vice President Constancio of the European Central Bank expects Euroland CPI inflation to rise to around 1.3% by March when the current program of asset purchases ends. If he is right, quantitative stimulus probably will not be extended further.

Swiss unemployment dipped 0.1 percentage point to 3.2% in October.

Turkish industrial production sank 3.1% in the year to September.

The U.S. JOLTS index of labor market hirings and separations gets released today.

But today’s attention-getter out of North America will be the U.S. presidential election. In 2012, President Obama beat Mitt Romney with 332 state electoral votes (270 are needed to win). Obama was initially elected with 365 electoral votes in 2008 to John McCain’s total of 173, A third of the senate seats, all of the House of Representatives, and many state gubernatorial spots are also up for grabs. The House virtually certainly will remain in Republican control. Who controls the Senate hinges on the margin of victory for the presidential contest. World financial markets prefer Clinton to Trump.

Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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