Florida

As we warned here first, and as the sellside crew finally caught on, while the key macro event this week is the US presidential election, the one most "under the radar" catalyst will take place in Greece (currently on strike for the next 48 hours, or, "as usual") on Wednesday, when a vote to pass the latest round of Troika mandated austerity (too bad there is no vote to cut corruption and to actually collect taxes) takes place even as the government coalition has now torn, and there is a high probability the ruling coalition may not have the required majority to pass the vote, which would send Greece into limbo, and move up right back from the naive concept of Grimbo and right back into Grexit. Which is why the market's attention is slowly shifting to Europe once more, and perhaps not at the best time, as news out of the old continent was anything but good: Spain's October jobless claims rose by 128,242, higher than the estimated 110,000 and the biggest jump in 9 months, bringing the total number of unemployed to 4,833,521, a rise of 2.7%, according to official statistics released Monday. This means broad Spanish unemployment is now well above 25%.  In the UK, the Services PMI plunged from 52.2 to 50.6, which was the lowest print in nearly two years or since December 2010, and proved that the Olympics-driven bump of the past few months is not only over, but the vicious snapback has begun.

Tired of pundits with black boxes and book deals telling you the election is a done deal because some statistically-sampling, biased, Garbage In, Garbage Out model "said so" (remember when the same GIGO logic made every structured piece of toxic RMBS toxic be rated AAA simply because the rating agency models couldn't account for the improbable case of real estate prices actually going down?) Then decide for yourselves. With 48 hours left until polls close, below are the 512 permutating paths available to the two candidates on their way to the White House throne (assuming the other states vote the way they are "expected"). And with the election having crossed far beyond mere theatrical tragicomedy and now well into NCAA finals knock out fever, one can see why Florida and Ohio are really all the matter.

Decide what you want most to be upset about for the next four years; vote accordingly. 

For millions of common people in New York and New Jersey, Sandy has been a historic disaster, with leaving ruined, homeless or forced to live in the dark and cold indefinitely. Sandy was a historic event for the Wall Streeters (a term used loosely as many of them reside in midtown or in Connecticut) among us too. And now, courtesy of Bloomberg's Max Abelson, we see how some of them managed to (just barely) scrape through...

The 2008 elections were contested on the basis of rescuing the banks and financial markets while claiming that this was ESSENTIAL to save the economy. Four years later, the 2012 elections are being contested on the basis that the economy HAS been saved, but more needs to be done to ensure that it  STAYS saved. Wall Street, as one of the first recipients of the new “money” cascading from both the Fed and the Treasury, has been happy to buy this. Main Street does NOT buy it. The result is an election campaign in the context of a comparative calm on financial markets and a seething discontent in the electorate.

Still unsure if to laugh off Sandy, memories of the overblown New York City panic over Irene still fresh, or if to sandbag the basement and first two floors of your house? Here is the latest on the storm courtesy of Jeff Masters' Wunderground blog, which at last check had the following characteristics: Wind: 75 MPH — Location: 29.0N -76.0W — Movement: NNE. In other words, slowly but surely approaching New York, with landfall still expected sometime Tuesday morning. One thing is certain: there will be at least some "boost" to Q4 GDP as a result of the quite a few broken windows, even as all domestic companies line up to blame Sandy for continuing to miss the top line and increasingly, their EPS numbers, some time in January.

There is an interesting dynamic unfolding in the housing market. Real estate agents in places like California are arguing that there is a lack of inventory and are also generally against the government unloading blocks of properties to big investors. Why? There has been bulk selling and buying to the investor class and a large amount of crowding out has occurred. This brings about an interesting set of problems for your average buyer in the current market. They are competing with swaths of big investors but also local flippers trying to make a quick buck once again courtesy of low interest rates and another mania in some markets. SoCal is now in a mania again as you will see with some of the patterns occurring. This is also happening in many other states as well. A new feudal system has emerged. The banks were bailed out by the Fed, were allowed to circumvent accounting standards, and now deep pocket investors in the financial class are buying up these places either to increase prices on flips or to hike up rents. In the end, if you want to compete in today’s market you need to bow down to the Fed, put on a football helmet and go head-to-head with big investors, flippers, suckers, and take on a massive mortgage.

That's another $190.1 Bn available to spend on IPad Minis and IPhone 5s in the Appleconomy!

The theme of buying real estate to rent out is nothing new, in fact courtesy of the government subsidized securitization gimmick known as REO-To-Rent, America's biggest asset managers have been able to load up on real estate virtually cost free, and hold on to it in hopes of renting it out to a US consumer. Alas, there is a qualifier: the "tapped out" US consumer. Case in point is Och Ziff, which as we wrote, after dabbling in the space for a year, has called it quits, and pulled out of the REO-to-Rent game. And they are the smart money, which means the returns for everyone else are only "downhill from here." That said, for now the meme is one of renting. In fact, as Reuters Insider points out, "Renting is the new American Dream." The problem is 'owning' was the old one. That ended in tears. This one will be no different. The only question is when. We think that when Brazilian model brothers come to Florida to buy up condos so they can rent them out, that's about as toppy as tops get (It is unclear if the two models also demand to be paid in EURs back in the homeland, like another infamous topticking supermodel and financial expert).

Whether you believe "your vote doesn't count" or taking productive time out of your day to be a part of selecting the next 'change' agent for the nation is worthwhile, Doug Casey - as ever - has strong views:

"a rational man, which is to say, an ethical man, would almost certainly not vote in this election, or in any other – at least above a local level, where you personally know most of both your neighbors and the candidates."

Don't expect anything that results from this US election to do any real, lasting good. And if, by some miracle, it did, the short-term implications would be very hard economic times. More important, however, is to have a healthy and useful psychological attitude. For that, you need to stop thinking politically, stop wasting time on elections, entitlements, and such nonsense. You've got to use all of your time and brain power to think economically.

This evening's main event (well aside from the baseball and the football), taking place in beautiful Boca Raton, Florida will be fought over six rounds focused on the 'never-a-dull-moment' topic of Foreign Policy. After last week's STFU stare on the Benghanzi bungle, we expect the incumbent from the blue corner to come out swinging (on his experience). The challenger from the red corner, will likely keep his distance early on as general items such as 'America's role in the world' are discussed but once his jab has been measured, and the debate switches to 'The changing face of the Middle East', we would expect the haymakers to start to be thrown. Let's get ready to deeeeebbbaaaatttteeeee! And may the first person to point out where the Straits of Hormuz are on a map, win!

The last time we checked on the (funding) status of America's real presidential race - the one where America's uber-wealthy try to outspend each other in hopes of purchasing the best president money can buy - the totals were substantially lower. With November 6 rapidly approaching, however, the scramble to lock in those record political lobbying IRRs is in its final lap. And thanks to the unlimited nature of PAC spending, look for the spending to really go into overdrive in the next 2 weeks as the spending frenzy on the world's greatest tragicomedy hits previously unseen heights.

BP's New Excuse Doesn't Hold Water

With less than 20 days to go to the election, the Presidential race has tightened following Romney's performances in the debates, as the Republican challenger has overtaken the president in the national averages for the first time this year (and RealClearPolitics has him with an edge in the electoral college also). But ever the fair-and-balance bank, Citi believes that Obama's advantages remain substantial, as an incumbent president in an improving economic environment. In this broad discussion, the Pandit-less bank addresses 'the data' driving their Obama call, what would have to happen for a Romney win, the Senate and House split, The Tea Party (and other unusual events), and the 'bungee jump'-causing headline risk of the pending Fiscal Cliff debate. Everything you need to know about the election-critical states, players, and events (and who would win in a fist-fight), but were afraid to ask Wolf Blitzer.

For the majority of Americans living along the country's coastlines, anything that is not within 50 miles of the the big water is pejoratively called "flyover states", its contents to be avoided at all costs, and its contributions to society and the economy to be loudly mocked and jeered at high society cocktail parties from the Hamptons to Malibu and back (but not inbetween). That is, until election time. Because when it comes to determining the fate of America's leadership every 4 years, the bankers, lawyers, venture capitalists, socialites, marketers, hedge funders, Economist PhDs, and other very important jobs, courtesy of the Electoral College, have absolutely no impact, and it all boils down to such swing states as Ohio, Florida, Iowa and Nevada. For the full cartoon presentation of what states do matter this election, see the cartoon below.