EPS

The Dow Jones Stoxx 600 dropped almost 3% yesterday, but today is trying to snap a three-day 5.7% slide that brought it to five-month lows.The S&P 500 gapped lower yesterday and settled on its lows. US shares are trading firmer.The greenback is mostly firmer, though the yen and British pound are firm.Most European currencies are softer, ahead of the ECB meeting outcome.Emerging market currencies are heavier, and the Turkish lira remains offered near the record lows seen yesterday.

It is not a prerequisite that an overwhelming majority of the country approve of the president for US equities to go up.It’s no secret that the US equity market has historically performed best with a divided government.This election is about who’s going to be the next president of the United States - it’s not about which sector may outperform next year, or where the stock market may be in the next four years.

New orders for durable goods posted a fifth consecutive gain in September, rising 1.9 percent following a gain of 0.4 percent in August.New orders for nondefense capital goods excluding aircraft, a proxy for business equipment investment, rose 1.0 percent in September after gaining 2.1 percent in August.However, the recovery is very uneven across the economy and the pace has slackened in some areas, raising concern about the durability of the recovery.

GDP rebounded in 3Q20.The ECB kept rates on hold but reported a weakening environment.Despite the rebound, the selling probably isn't over.

The election in 2016 occurred during a very different volatility environment than markets are currently facing.Markets reeled in response to the results of the 2016 presidential elections, with E-mini S&P 500 futures prices falling more than 6% before ending the day higher.The election in 2016 occurred during a very different volatility environment than markets are currently facing.

Looking at Merck's response to strong earnings yesterday (big beat and raise) might be telling us President Trump's prospects are better than suspected.Thinking about 2021 S&P 500 EPS estimates, there is no question the biggest haircut would come from a reversion in the corporate tax rate back to 28-29%.2021 could be a grim year if we have the 6th year in a row of low-single-digit S&P 500 EPS growth, and that would be optimistic.

An all Democratic government is bullish in the long run because it means the government is likely to be pretty loose with the purse strings.When you build a house you realize that so much of the economy is dependent on stability in these goods that go into a home because they all comprise such a large part of the economy.My general view is that the President does not really matter for the stock market.

When a stimulus program moves money around, some people will have more and others will have less.The purchasing power of our dollars declines with inflation, so the cost of stimulus is spread widely across the population.Helping the economy is a false justification for a stimulus program.