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“The ignorance of one voter in a democracy impairs the security of all.” – John F. Kennedy

Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.  

It’s finally over.  The votes are counted, and the results are in. In the words of one CEO involved, “While the past few months have been difficult for all of us, we are all part of the same team. We will only move forward by listening and working together.”  Yes, the Boeing strike is over. Wait, you didn’t think we were talking about the election? For that, the votes are still coming in and need to be counted, and one thing we can be confident of is that once we do finally have a winner, there will be very little ‘listening’ and ‘working together’ with the other side. Not if past experience is any indication of future results!

Heading into today’s session, equity futures are modestly higher. Outside of Palantir (PLTR) which is up by double-digit percentages, much of the earnings news overnight was weak, and this morning’s only economic report is ISM Services which is forecast to come in at 53.8 from 54.9 in September. Europe and Asian markets were mostly higher overnight, while Treasury yields and crude oil have also joined in on the upside.

If the betting market odds are to be believed (big if) when the dust all settles, former President Trump will be the 47th President, Republicans will take over the Senate, and Democrats will retake control of the House. Wouldn’t that be an interesting mix?

Based on numbers from electionbettingodds.com, there have been some notable moves in the betting markets over the last few weeks.  After trailing late in the summer and into early September, former President Trump saw his odds steadily improve from around 45% in mid-September to roughly 63% in late October.  From there, VP Kamala Harris saw her odds rebound briefly into this past weekend, but as we headed into Election Day, her odds have pulled back again and now stand at 41.0% versus 58.5% for Trump. While a nearly 20-point gap in the betting markets looks wide, it’s a smaller lead than it seems and indicates only a modestly better than coin-flip chance in favor of the former President. Nothing is close to guaranteed at this point.

As Trump’s odds rallied from mid-September before peaking out in late October and subsequently pulling back into the weekend, there were also some notable moves in the equity market. The table and chart below compare sector performance from 9/18 to 10/29 (when Trump’s odds were improving) to performance from 10/29 to 11/4 (when Harris’ odds rallied).

When the market started to price in a Trump win sectors like Technology, Communication Services, Financials, Consumer Discretionary, and Industrials all rallied over 3% while Health Care, Consumer Staples, and Real Estate fell over 1%.  When Harris’ odds started to improve, Energy was the only sector with gains (1.82%) while Technology was the worst-performing sector. As shown in the scatter chart, it’s not a perfect relationship but many of the best-performing sectors during the period when Trump’s odds were rising were some of the weaker performers when Harris’ odds improved and vice versa.

Before finishing, we wanted to leave off with one last snapshot of sector performance heading into the election results from our Trend Analyzer. It’s a mixed picture. Most sectors are down over the week, and while there were four overbought and two oversold sectors a week ago, today, Communication Services is the only overbought sector while Consumer Staples, Health Care, and Real Estate are all oversold. Relative to their 50-day moving averages, six sectors are above and five are below. You can’t get much more neutral than that! Don’t forget to vote.