If there was ever something everyone could agree on, it has to be the near unanimous desire for the presidential election to be over with. Everyone from company CEOs to taxi (or Uber) drivers are ready for this election to be behind us regardless of the outcome. There is also a clear sense that it is impacting our economy.
Consumer sentiment, as measured by a University of Michigan Survey fell sharply in September and the blame fell squarely on the election anxiety. “It is likely that the uncertainty surrounding the presidential election had a negative impact, especially among lower income consumers, and without that added uncertainty, the confidence measures may have not weakened,” wrote Richard Curtin, chief economist for the surveys.
The CEO of KFC, Taco Bell and Pizza Hut operator Yum Brands, Greg Creed echoed that sentiment in his recent conference call to anaylsts: “I think where we’re what five weeks away from a general election, I think there’s just great uncertainty as to what’s going to happen in the U.S. as a result of the outcome of the election. It goes without saying that people are sort of trying to decide who to choose and what the impact will be on the economy. And I think people maybe just hunkering down a little bit.”
The CEO of steakhouse restaurant chain Del Friscos’, Mark Mednansky, commented last week:
“During any election cycle, once there is a victor, usually there’s a big sigh of relief and people go out and spend, and they’re hopeful. And that’s what we think will happen because it’s happened so many times in my history in this industry.”
UNCERTAINTY TOP = MARKET BOTTOM
One rule you can usually depend on is that the market low for the cycle will be the day that represents the absolute highest point of uncertainty and anxiety about the economy and markets. In other words, the best buying opportunity we might have. Hopefully we will get that “big sigh of relief” after the election and see the market break out of this frustrating trading range!
There are some positive signs that a market turn may be around the corner…technology and industrial stocks are going higher while the more defensive consumer staples and healthcare stocks appear to be rolling over. Precious metals gold and silver have been hit hard in recent days while interest rates on long-term bonds have been going higher, both indicating that the level of fear in the market is subsiding.
Of course the Fed could (and probably will) throw cold water on the warming market with an interest rate hike after the election, but hopefully that will turn out the same way as last December’s hike (and the Brexit vote) and be quickly forgotten. It is actually hard to believe that the market is only 3% from its all-time high!
“Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it. “
Our emotions definitely are challenged by the negative drumbeat of the media, but it is our job to filter the noise and help our clients and friends make good investment decisions in spite of the confusion. Please give us a call any time you are feeling queasy or need a personal update. We always enjoy hearing from you.
Views expressed are those of Dave Crouch and not necessarily those of Raymond James Financial Services and are subject to change without notice. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Past performance is not indicative of future results. There is no assurance these trends will continue or that forecasts mentioned will occur. Investing always involves risk and you may incur a profit or loss.