DOWN TO THE WIRE

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By Danny Riley
One of the most important elections of our time is going to be decided today. Like it or not, good or bad, tonight we will learn who will be our president for the next four years. During the debates Mitt Romney started pulling ahead, and as he did Wall Street jumped on his bandwagon. As things come down to the wire, it seems Wall Street has done a sudden U-turn and is now convinced President Obama will win a second term.

Four years ago
I wrote a story several months before the 2008 election saying that Obama would win by a landslide, that the people were looking for change. After four years of having him in office, many people are asking what has changed. We are not sure it would have mattered who won the election. The markets were already going into a tailspin and job growth was already contracting. Despite the downturn the markets have made a big turnaround. While job creation has not been where the government would like it to be, it does look like some type of economic pickup is under way.

Too scared to change
When it comes down to it, we think people are too scared to make a change. The undecided voter doesn't know what to do: vote for Obama and face the fiscal cliff and all its uncertainties or vote for Romney and continue the Bush tax cuts.

Hurricane victim  
Romney had the momentum going his way, but once the storm rolled in he seemed to disappear almost like people forgot about him .The hurricane seemed to take the wind out of the campaign and he was unable to capitalize on his debate gains. Many Republicans have said it looked like he had it going his way but that he did nothing to press his gains and the hurricane did the rest.

The incumbent
Obama has always had a good relationship with Wall Street. In his first run for the White House, Wall Street heavily favored Obama; four years later he still is favored but not like he was in 2008.
In the end this election comes down to some very hard choices. Embrace change and go with Romney or stick with Obama for another four years. To me, neither choice is a very good one.

Danny Riley is a 34-year veteran of the trading floor. He has helped run one of the largest S&P desks on the floor of the CME Group since 1985.

S&P FUTURES: Out of the last 13 trading days the ESZ has been down 8, up 4 and unch’ed 1.

Our view:
It’s finally decision time. It is our guess that we are in for another four years of President Obama. Like we have said, the American people are too scared to make a change. As for the markets, we think it will be pretty much slow and to the upside. The S&P was unable to press the sell stops under 1400 and now the search is on for buy stops about the 1420 level. As always, keep an eye on the 10-handle rule and please use stops.

  • It’s 6:00 a.m.and the ESZ is up 4.25 handles at 1416.25, crude is up 39 cents at 86.04 and the EC is trading 1.2810, up 17 ticks.
  • In Asia 6 of 11 markets closed higher (Shanghai Comp. -0.38%, Hang Seng -0.28%).
  • In Europe 12 out of 12 markets are trading higher (CAC +0.76%, DAX +0.67%).
  • Today’s headline: “US Vows to Avoid Fiscal Cliff Amid G-20 Warning.”
  • Economic calendar: Today:  3-Yr note auction, ELECTION NIGHT; earnings from Nissan, CVS Caremark, NYSE Euronext, Office Depot, News Corp. WEDNESDAY: Weekly mortgage apps, oil inventories, 10-yr note auction, consumer credit, Coach shareholders mtg, Oracle shareholders mtg; earnings from Macy's, Sodastream, Qualcomm, Activision Blizzard, CBS, Monster Beverage, Whole Foods. THURSDAY: International trade, jobless claims, 30-yr bond auction, Kellogg analyst day, 3M investor mtg, OPEC press conference; earnings from Dean Foods, Wendy's, Disney, Groupon, Nordstrom, Nvidia, Kayak, Zipcar. FRIDAY: Import/export prices, consumer sentiment, wholesale trade; earnings from JCPenney
  • VOLUME: 1.38mil ESZ and 6k SPZ traded
  • SPREADS: 146 SPZ/H spreads traded
  • FAIR VALUE: S&P +0.5, NASDAQ +5
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