TGIF! November 4, 2016

Competition is such an important ingredient in our daily lives.  It naturally breeds top quality at the lowest possible price.  We are Market people who believe that matching buyers with sellers is the pure and true method of price discovery.  Competition makes that happen.  Consumers are generally willing to pay more for higher quality.  That’s certainly the case with restaurants, retail stores and most consumer goods.  Lower quality is generally worth less but not necessarily worthless.  You can get a lot for $1 these days.  Dollar menus are amongst the most competitive markets there are.

Competition can bring out the best in us.  It triggers innovation and ingenuity.  We rise to the occasion and elevate our efforts.  When you’re in heated competition, you always need your “A” game.  The World Series was a great example of this.  Game 7 this week saw the Cubs and the Indians battle in desperation knowing that only one of them would be crowned champions.  Both teams played their hearts out.  It was an exciting game that went extra innings and even had a rain delay before the Cubs prevailed for the first time in over 100 years.  That is very cool.

Competition can also bring out the worst in us.  Sometimes people crumble under pressure or resort to nasty tactics to achieve the upper hand.  This Presidential election certainly embodies some of the worst characteristics of any competition. The low favorability ratings are unprecedented for both candidates.  But this election is huge for so many reasons.  The world is watching with keen interest.  So are investors.  It’s been a tough go for the Stock Market of late.  The S&P 500 has declined 9 consecutive days.  That’s the first time that has happened since 1980.  But, importantly, it’s been sort of a slow bleed, with just a 3% decline during this time.  But anxiety remains high.

We have utilized FiveThirtyEight as a polling tracker for years.  It’s run by Nate Silver, a statistician for ESPN and ABC news, who has developed a proprietary statistical forecasting model that is used for sports, politics and other areas.  Silver successfully predicted all 50 states in the 2012 Presidential election and 49 of 50 in 2008.  Silver’s model, as of Friday afternoon, forecasts 289 electoral votes for Clinton vs 248 for Trump.  270 are needed for victory.  He is forecasting a 48.4% popular vote for Hillary vs 45.7% for Trump.  Libertarian candidate Gary Johnson is forecast to get 4.3% of the popular vote.  In the tightly contested Senatorial race, Silver projects a 61% chance that the Democrats retake control.  That’s down from 73% last week.  The Republicans seem safe to keep leadership in the House.  These results support the base case for what the Market expects, and possibly wants.  A Clinton White House with Chuck Schumer leading the Senate and Paul Ryan leading the House could provide the right chemistry for compromise and deal-making.  A big risk is waking up Wednesday and not knowing the final outcome.  The Market certainly won’t like that.  We expect the volatile price action to continue and generally believe surprises won’t be received favorably by the Market.  We’re all over it.  We’ve got your back, always.

My girls will be competing on the soccer field this weekend.  Coach Daddy loves competition…

Have a nice weekend.  Remember to turn back your clocks.  We’ll be back, dark and early on Monday.


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