The race for the Presidency has taken several twists and turns the past few weeks. Last week was a real doozy: Wikileaks release of emails, Donna Brazile’s scandal and FBI Director James Comey’s letter to Congress. All told; the election outlook is becoming more uncertain as Donald Trump catches up to Hillary Clinton.
I quantified that uncertainty which was outlined yesterday in a popular article in Forbes. As I wrote, “We have a House. We have a Senate. Who controls Congress matters and the balance of power needs to be factored into any analysis of both a post-election market reaction and how investors should in turn react.”
There are eight possible president/House/Senate configurations worth considering. Forbes detailed my analysis of “The Two Most Likely Outcomes of Eight Possible Scenarios.” I suggest you read the article and pass it on to friends and colleagues. As the election is a fluid situation, I will update my Forbes article next week.
The heightened uncertainty has manifested itself in the Standard & Poor’s 500 (SPX) which has declined for six straight sessions by a total 1.84%, as Trump’s candidacy gains momentum heading into next Tuesday’s election. Small cap stocks which are more sensitive to interest rate increases have been hit the worst. Implied options volatility, a measure of market fear and uncertainty has been on the rise. It is also worth noting that the bond market is getting sold rather aggressively as yields rise. Money is flowing out of bond funds at accelerated rates. My opinion is that cash will eventually make its way to the stock market.
This next week is not going to be smooth sailing. The FOMC meets today but I expect no action. During these periods of uncertainty, it takes patience and discipline to stay focused and not panic. You just need to hold on a few more days till the clouds of uncertainty disappear.
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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC held no positions in stocks mentioned; although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant, beverage and agricultural stocks. An individual subscription to the newsletter can be ordered at www.restaurantstox.com Furthermore; Scott is also a professor at the Seton Hall Stillman School of Business in South Orange, NJ.
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