Volatility

Citi: "A Clinton Presidency Will Be Marked By Near-Continuous Investigations, Impeachment Risk"

"Mr Trump ‎may be heading for defeat but the prevalence of low trust, identity politics and demographic divides across the developed world suggests that he will not be the last non-mainstream candidate to come close to power.  Moreover, a Clinton presidency is highly likely to be marked by near-continuous investigations as well as the risk of impeachment." - Citi

Gundlach: "We Got The Bearish Signal; Stocks Are Going Down - You Can Feel It"

"We got the bearish signal," Gundlach said about the S&P 500 dropping below 2,130 on Monday. "It is more noteworthy and reinforces the bear signal that the market is down a lot today. The dam is breaking, you can feel it." Gundlach expected another 5-10% drop in the S&P 500, which closed at 2,111.72 on Tuesday.

VIX Hedges Building Fast After Scare-less October

Octobers are supposed to be the scary, and not only because of Halloween. Market observers like to point out how much more volatile October is relative to other months. Not so in 2016 as Goldman notes this was the 4th lowest average VIX since records began. However, the last few days have seen hedgers extremely active ahead of next week's election (despite one of the lowest levels of S&P 500 realized volatility recorded).

Italy Seen More Likely To Exit Eurozone Than Greece; Italian Bond Yields Surge

In an unexpected reversal of (mis)fortune, this morning Sentix writes that the Eurocrisis creeps back into the heads of the investors in a new way: it is no longer Greece, but Italy which is now the country that is most likely to leave the Eurozone within the year from the perspective of the more than 1,000 investors surveyed. "This development underscores the importance of the referendum to the Constitution in Italy on December, 4th."

Frontrunning: November 1

  • There is a bubble in articles about China's bubbles: Asset Bubbles Threaten China’s Economy (WSJ)
  • Hillary Clinton’s Wall Street Fundraising Benefited From Loophole In Federal Anti-Corruption Rule (IBT)
  • Clinton and Trump Prepare for Possibility of Election Overtime (BBG)
  • Trump Leads Clinton by 1 Point in New Poll as Enthusiasm Declines (ABC)
  • Investigating Donald Trump, F.B.I. Sees No Clear Link to Russia (NYT)

Market Trapped As Recession Risk Rises

With the ongoing political circus, weak corporate earnings (considering the massive reductions in expectations since the beginning of the year), Apple and Amazon both missing expectations (which really goes to the heart of the consumer), and consumer sentiment waning, it is surprising the markets are still holding up as well as they are. As long as the markets can maintain support about 2125, the bull market is still in play, but at this point, not by much.