Today it seems that the markets have priced in Hillary Clinton winning the election and the republicans retaining control of the House and Senate. What will bring about market volatility is any uncertainty about the results of the election.
Right now, many people are focused on the presidential election. This can be one of several shiny objects that can distract the markets and your portfolio. Some investors may be distracted from focusing on the important issues that could affect their investments.
Historically, the markets react differently after a presidential debate depending upon who it perceives as the debate winner. Regardless of who your candidate is, the market will respond with its own perception. Here is what we believe could happen in either scenario.
This morning we had a lot of debate on whether or not the Fed model is broken. The Fed model uses a lot of indicators and data to determine whether or not to raise or lower rates. If you look under the hood, there is some weakness there that might give the Fed pause in September.
The S&P 500 has currently gone 40 sessions without as much as a 1% move up or down. There is no crisis to fix and this is creating bored and dangerous investors. There is a difference between a bored and a shrewd investor.
Investors are frustrated over the market uncertainty that is being created by the Fed. The Fed seems to be playing a word game which is hurting the markets and creating market volatility. More in the video.