Friday, September 30, 2016

Debate gift keeps on giving:
Market lifted by Clinton’s performance

FOR STUDENTS of politics, Monday’s first presidential debate helped distill the candidates’ perspectives on vital issues; for investors, it set the stage for market reaction, based on their perspectives. If market performance of this week is any gauge, and it is, Wall Street feels more comfortable with the prospect of President Hillary Clinton.

In Politico, Ben White reported on Wall Street’s hearty rally on Tuesday.

“U.S. stock futures rose sharply immediately following the debate, which most pundits and surveys suggested the Democratic nominee won handily. The Mexican peso soared. The currency tends to drop as Trump’s chances rise, with investors betting on the GOP nominee making good on his promise of new trade tariffs.”

The Dow was on a glide path all day, climbing 133 points. White reported that some of that rise “was in response to a very strong consumer confidence number,” but you can't silo confidence. You have to wonder how much of that number had to do with consumers’ confidence in the prospects of Clinton in the White House.

Dollars weren’t the only currency to be affected. “We’re seeing a bit of a ‘relief rally’ today. Equity markets are higher, and the peso, one key anti-Trump barometer, has rebounded from its multi-year low hit yesterday,” said Jack Ablin, chief market strategist at BMO Private Bank, to Politico.

“There was certainly a reaction in the futures, and that was clearly related to the debate,” said Jim Paulsen of Wells Capital Management. “Traders clearly decided before the debate that a Trump win would be bad and a Clinton win would be good.”

On Tuesday, the day after the debate, the Dow Jones Industrial Average opened at 18,099.21. When it closed on Thursday, the Dow was at 18,143.45. There was a sell-off earlier Thursday, resulting in a 1.35 percent decline. But the market rebounded, opening Friday morning at 18,268.57 and finishing the day well north of that.

You can’t set your watch by market moves like this. But for Team Trump, it’s just one more thing to have to push back against ... like how bad it looks when the Trump unique selling proposition — I am better for the economy — is thoroughly repudiated by the people who work in the economy.

Image credits: Clinton: via MSNBC. Trump: Evan Vucci/Associated Press.

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