Skip to main content

October Surprise(s).....

In American political jargon, an October surprise is a news event deliberately created or timed or sometimes occurring spontaneously to influence the outcome of an election, particularly one for the U.S. presidency (Source: Wikipedia). Well... it started last week due to unfortunate timing of death of Supreme Court Justice Ruth Bader Ginsberg. President Trump and GOP senate members wasted no time in starting the process of nominating conservative judge Amy Coney Barrett. This by far could become most important election issue and hence can be qualified as October Surprise. Once justice Barrett is confirmed, Supreme Court would be 6-3 with conservative majority (first time in 100 years) and could have long term implications on many key decisions. This is one of the most important policy power Presidents and Senate members have and hence winning these elections matter so much. President Trump is the only president in recent history who got to nominate three Supreme Court judges in his first term. Nov 3rd would tell us if he gets second term or not. The polls suggest that Biden is going to be most likely winner unless election becomes contested and it goes to Supreme Court similar to what happened in 2000. And during Gore vs Bush election, Supreme court was 5-4 with narrow conservative majority and rest is history....
Let's look at market landscape... as predicted in previous blog "Fall is Coming", markets did start its September Swoon after reaching high on Sept 2. Since then S&P is down by 8% and Nasdaq is almost in correction (close to 10% down). Many high-flying tech stocks (FAANG group, Tesla) are down by 20% or so. Energy and Financials are still in doghouse and keep going down...As overall market, indexes are down for 4 consecutive weeks. However at same time IPO and SPAC market is bubbling like its 1999...So how would October which is known for major market crashes (1929, 1987, 2008) play out? And that too with so many unknowns like elections, Q3 earnings, virus surge, economy opening/closing, vaccine news and potential of busted holiday shopping season....
My prediction is that markets would bottom out in next few days and then trade sideways for rest of Oct. The tech earnings would be repeat of Q2 and companies which continue to show double/triple digit growth would be rewarded (Zoom is up by 11% last week and worth almost same as many big tech companies). Zoom, Peloton, DOCU, Cloud companies, Tesla, FAANG would regain their footing and start their march towards all time highs again by end of year.
Energy and Financials would continue to struggle but most likely won't go down much since most of the bad news is already priced in. Healthcare would have major ups and downs due to success and failure of COVID-19 vaccines. Healthcare is also very sensitive to election news since it can have outsized impact on policies like Obamacare...but in general markets would incorporate most of these October Surprises(s) and would be well positioned to recover and resume its march towards all time highs no matter who wins the Presidential election. S&P could be around 3500 by end of 2020. Interesting times....In the meantime, enjoy the sports season with College Football, NFL and IPL...

/Shyam

Comments

Popular posts from this blog

2025 = Is it going to be 1997 or 2000?

Happy Holidays... After 5 months of hibernation with no real reason than writing block, I decided to use quiet morning of Christmas day to start writing again. Lot has happened in last 5 months - in particular release of Animal Spirits with Fed starting interest rate reduction cycle and historic victory of President Trump for 2nd term. As the year turns into 2025 and stock markets at all time high, one would wonder, what's next?  To answer this, one needs to look back at 1920s and 1990s to give us some context on where markets may be headed. 1920s saw invention of televisions, radio, wider adoption of cars, vacuums, penicillin and many other which we consider household items now. These inventions created roaring 20s with markets going up by 500% eventually leading to crash of 1929. However during mid-20s, markets keep going up due to excitement of these inventions and end of World War-1 and Spanish Flu Pandemic. 1990s also saw many inventions - the key being launch of Netscape in 1...

Elections and Rotations!

2024 will be known as an important year in terms of elections (97 nations covering half the population) across the major countries in the world. We are only halfway thru the year and already some key nations have gone thru elections and voters have indicated their preference for change (in a way). Let's take a look at few. India - Modi's BJP started with lots of enthusiasm with slogans of "Modi ki Guarantee" and "400 paar" (more than 400) seats (out of 543). Indian voters (which I considered one of the most smartest) gave reality check to Modi and BJP by reducing BJP count to 240 (from 303 in previous parliament) forcing it to form coalition government. I have lot more detailed hypothesis on these results (but not here). Almost everyone (including me) got their predictions wrong and lost some friendly bets. Indians want balance between "Strong, Prosperous, Proud" India with "Inclusive, Employment and Harmony". Modi and BJP are quick learn...

The "i" factors are back again!

Happy Earth Day! In following Stotra, we remember Mother Earth every morning before touching feet to the ground. समुद्रवसने   देवि   पर्वतस्तनमण्डले   । विष्णुपत्नि   नमस्तुभ्यं   पादस्पर्शं   क्षमस्वमे   ॥ Samudra-Vasane Devi Parvata-Stana-Mannddale | Vissnnu-Patni Namas-Tubhyam Paada-Sparsham Kssamasva-Me || Meaning : 1:  (Oh Mother Earth) O  Devi , You Who have the  Ocean  as Your  Garments , and  Mountains  as Your  Bosom , 2:  O  Consort  of  Lord Vishnu ,  Salutations  to  You ; Please  Forgive my Touch  of the  Feet  (on Earth, which is Your Holy Body). (source: Green Message site) So let's make sure that we honor Earth every day and preserve her for millions of years..After all we have only ONE! It has been six weeks since I wrote about markets. During that time, markets reached all time highs (almost touching 5300) and down by 5% from those levels. W...