OPEC says that next year will be a turning point for crude oil toward a more balanced market and we will be at a turning point for the world as the United States elects a new President. As OPEC raises its demand forecast, oil starts to price in a Hillary Clinton presidency that will lead to more regulation and ultimately higher prices.
The conventional wisdom is that active investors and market participants prefer Hillary Clinton over Donald Trump to maintain the seven-year stock market advance that began in 2008 and took out prior highs in 2013. According to a new election eve survey – that is only partially true.
First things first. As we head into the final leg of the 2016 U.S. general election that has seen vitriol and tangential issues (personality and peccadillos) elevated to what were previously unimaginable levels, we repeat our previous admonition: THERE IS ABSOLUTELY NO INCENTIVE TO HOLD ANY INTERMEDIATE-TERM MARKET POSITIONS INTO THE U.S. ELECTION THIS TUESDAY.
Next month’s election is the first since the Federal Reserve ended Quantitative Easing (QE) efforts. But it’s clear that monetary policy and the Fed has taken the spotlight away from the candidates’ fiscal policies and plans for economic growth. This is the direct result of two major trends over eight years.
In a piece subtly titled “Institutional Investors are Delusional,” Meb Faber points out that the mean expectations in a poll of investors on net returns is 13%. That would require a gross return of 20%. Just 1% of more than 400 respondents (so just four people) are rational.