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Weakening Wednesday – Presidential Debate Spooks the Market

Well that went as expected.  

Yesterday we titled our Morning Report: "Testy Tuesday – Shorting the S&P 500 at 3,350" and we made a lovely $1,250 per contract on our shorts and got another chance to get in at 3,350 in last night's futures and we have another dip as the markets started selling off for exactly the reason I predicted yesterday:  

President Ponzi will debate Sleepy Joe Biden this evening and that's going to be depressing.  Much as we need to get rid of Trump, Biden is simply not an exciting alternative.  

Debates are a time when we talk about what's wrong with the country and, unfortunately, there's a lot wrong with the country and neither candidate seems like the guy who's really going to fix it although at least getting rid of the guy who is breaking it couldn't hurt.  It's like when you hire an incompetent plumber and your house is filled with backed-up sewage – you don't tend to say "let's give this guy 4 more years."  Sometimes ANY alternative is worth a try and that's what the Democrats have given us this year – "Biden 2020, he's not Donald Trump".

“Markets seem to be getting more concerned, with VIX futures peaking around the election,” said Edward Park, deputy chief investment officer at Brooks Macdonald. “But whoever takes over, and however long it takes to take over, the person will be facing a battle against coronavirus.”

Delays to fiscal stimulus on both sides of the Atlantic are also a worry for investors, who fear economies will need fresh support in the absence of a clear timeline for a coronavirus vaccine. While U.S. lawmakers are trying to find common ground on a deal ahead of the election, a German government spokesperson late Tuesday warned of possible delays to the approval process for the EU recovery fund.

“For financial markets, there’s a growing understanding that it was a V-shaped rebound, but that doesn’t mean it will be a V-shaped economic recovery,” said Carsten Brzeski, an economist with ING Bank in Frankfurt. “Any delays in fiscal stimulus will add to that realization.”

Shares in Disney (DIS) fell 2.7% ahead of the opening bell after the company said it would lay off about 28,000 employees at its domestic theme parks, shortly after the state of California signaled that Disneyland Resort would likely have to remain closed for the foreseeable future due to Covid-19 concerns.  Another 1,000 Americans died of Coronavirus while Trump was telling Biden what a great job he was doing and 40,000 Americans were infected yesterday – 2,500 new infections during the 90-minute debate

Consumers were a little more confident about the economy in yesterday's survey but not as confident as Wall Stret Journal headline writers were when they said:  "Conference Board index surges to 101.8 in September amid improving labor market and receding coronavirus trends" and yes, this is the chart that went with the word "surges".  The share of respondents in the Conference Board’s index reporting jobs as “plentiful” climbed to 22.9% in September, from 21.4% in August—and compared with just 16.5% in May.  

So 22.9% of the people in this country are idiots who believe anything they see on Fox despite all actual evidence to the contrary?  I'm not sure if that makes me more confident….

The unemployment rate is 8.4% – that's considered a crisis in normal times.  The preliminary September reading of the University of Michigan’s index of consumer sentiment, released Sept. 18, registered a less dramatic increase, climbing to 78.9 for the first half of the month. It was also the highest level since March, though it rose only 4.8 points over August. The University of Michigan will publish its final reading for the month on Friday.  

While the labor market continues to recover, real-time data suggest momentum has slowed. The share of small-business employees working who had logged hours in January fell slightly in September, according to Homebase.  This reflects in part a sluggish spending on services, which has recovered much less than spending on goods.

“Yes, jobs are returning and the federal income support has been a big income booster and equities have more than recovered their losses, but worries about the virus continue to linger and will continue to constrain how we go about our daily lives for many more months,” said James Knightley, chief international economist at ING.

Unfortunately, we don't have months.  Voters are going to have to choose between reality and fantasy in just over 30 days and God help us all if they choose wrong.

Is this the real life?
Is this just fantasy?
Caught in a landslide,
No escape from reality.

Too late, my time has come,
Sends shivers down my spine,
Body's aching all the time.
Goodbye, everybody, I've got to go,
Gotta leave you all behind and face the truth. – Queen

Remember having fun?  


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  1. Good Morning.

  2. I slept better knowing Kamala Harris will be our V.P…… ;)

  3. Good morning. Here is the link to today's Webinar.

  4. Good morning!

    Big bounce in the Futures already, we'll see how things shake out.

    This is interesting:

    The U.S. Cities With the Highest Economic Output

    Each year, the 10 largest cities in America generate about $7 trillion dollars in economic output — about a third of the US annual total.

    In 2020, cities have been mostly shut down, as the pandemic has led to strong protective measures in denser populations, with cities having the highest per capita per square mile.

    Will cities recover? How fast? I don’t know, but for the past few 1000 years, cities have been the core drivers for all sorts of economic activity: Finance, Creative arts, Real Estate, Media, Technology, Medicine, Theater, Education, Television, etc.

    For those betting against cities, I have one question: What will replace their economic output? What might get lost in shifting that production to a WFH remote set up?

    How Corporations Pillaged the Free Market

    As with many ideas that look good on paper but don’t work in practice, the decision to encourage management to put profits first and tying its compensation to near-term stock prices had serious downsides. It made management very short-term focused, often causing it to put the corporation’s long-term interest at risk, a point made as early as 1980 by Harvard Business School professors Robert Hayes and William Abernathy. It also encouraged stock price manipulation through share buybacks.

    Center economist Luigi Zingales points out that Friedman assumed a competitive market, something that does not exist in many industries these days. Therefore, competition policy, including aggressive antitrust enforcement, is a necessary complement to his doctrine. 

    Democratic Senator Elizabeth Warren is pushing legislation to require that corporate governance includes the interests of the public and stakeholders, as well as shareholders, in business strategy and operations. 

    How China Is Taking Over International Organizations, One Vote at a Time.

    Cash Tidal Wave Gives Asia Best Ever Third-Quarter Share Sales

    Gold-Buying by Central Banks Seen Climbing From Near Decade Low.

    Oil Holds Below $40 as Concerns About Demand Recovery Increase.

    JPMorgan Admits Spoofing by 15 Traders, Two Desks in Record Deal

    Antibody Cocktail Shows Promise; NYC Positivity Up: Virus Update

    Regeneron says that trial coronavirus drug cocktail cut virus load, aided patient recovery.

    Covid-19 Cases Tick Up in New York as U.S. Infections Edge Down.

    Xi Jinping’s Tech Wonderland Runs Into Headwinds.

    Retail Store Closures Hit Record in First Half.

    Disney to lay off 28,000 employees as coronavirus slams its theme park business.

    GM extends talks on $2 billion deal with Nikola after fraud, sexual assault allegations surface.

    UnitedHealth has acquired DivvyDose, a competitor to Amazon’s PillPack.

    Micron stock slides as weak outlook follows doubled earnings.

    Helicopter Money And The End Of Taxes.

    Gov Cuomo Threatens To Send In National Guard To Pick Up Trash As NYC Garbage Crisis Worsens. 

    Jim Quinn: The Only Thing 'Systematic' Is The Destruction Of America.

    ‘Chilling Moment’: How Beijing Pressured California Senate to Scrap Human Rights Resolution.

    China’s Largest Real Estate Developers Face Financing Crunch.

  5. Phil/ES


    ES 3350 target is good.

    what do you expect if Pelosi and Munichin come to an agreement for stimulus in the next day or two?

    Back up to 3500? 3580?

  6. almost time to reload on es 

  7. PHil-Biden may not be a brain but he is intelligent enough, with Harris at his side to surround himself with the best and the brightest and he is capable of listening, something we do not have now.

  8. Stimulus/Maya – Well, as I said before 1Tn was too little but $2.2Tn is probably about right.  We'll see if anything actually gets done.  Trump is desperate for something to hand the voters so why not spend $2.2Tn?  For the Dems, could be their last chance to get stuff done because, if Trump is re-elected, not only won't he ever cooperate with them again but I wouldn't be surprised if they start holding Un-Trumpian hearings and removing people from office until Congress is 2/3 Republican.

    Our past is our future.

    ./ES/Tommy – Lots if thrust this morning.  Watch for a triple top:

  9. i overslept this morning and forgot i had some long /ES gambles on from last night.  Sometimes being forgetful pays off. Cashed out very quickly ;) ;)

  10. This is good:

    Well-played Monk! 

  11. A high IQ is not a prerequset to becoming POTUS.


    Competence and a moral compass that works, is all this Country needs. Simple. 

  12. 1020-You gave me my laugh for the day. Thanks! We didn't think it could go lower than GW-WRONG.

  13. Honestly Pirate, Who would have thought?  :(

  14. :)

  15. I have to just say… the market (and I suppose its participants by proxy) is crazy. I don't remember it ever being like this in the last 20 years. It's like that loose cannon friend who you appreciate seeing and is fun to hangout with but also wildly unpredictable and sometimes starts fights in Olive Garden. 

  16. Fights in Olive Garden?  


    What is, early-bird dining in Delray Beach?….. ;)

  17. Good description Monk.

    LOL 1020 – for $200…

  18. A bit of a draw saved oil (for now):

    • EIA Petroleum Inventories: Crude -2.0M barrels vs. +1.6M consensus, -1.6M last week.
    • EIA Gasoline +0.7barrels vs. -1.1M consensus, -4.0M last week.
    • EIA Distillates -3.2M barrels vs. -0.9M consensus -3.4M last week.

  19. Wow, speak of McCarthyism – this is what a Press Conference is like now:

  20. A two-page White House ‘race’ memo became a flash point in Tuesday’s debate

  21. What really screws me up with this market is the way it reacts to covid news, in either direction. As an epidemiologist, I'll see a bit of news and think, okay, that's a bit of progress or if not, that's about what one would expect – and the market goes nuts. Drives me crazy trying to figure it out. I guess any headline that says "covid" or "vaccine" will result in a big spike.

  22. End of month window-dressing as Doug said in the Webinar.

    Does seem to be some progress on stimulus, that's a good excuse.