Thoughts {09.29.16}

Markets saw a nice rally yesterday with the major indices again recording average gains of around one half of a percent.  Markets started the day more or less flat but rallied during the day on two things.  The first were rumors of an modest curbs on oil output out of the current OPEC meeting.  The 2nd I think was the growing consensus that Mrs. Clinton was the clear victor in the 1st debate the other night.  

The news on oil gave us a nice rally in energy stocks.  I think if it holds and we see a floor in oil prices in the $45-55 dollar a barrel range then we could see a stabilization in this sector along with the removal of price uncertainty.  That would mean that the dividends of the major players would be considered more secure and likely bring back more investment for exploration and development into the sector.  That would in turn be good for all the suppliers to the oil companies themselves.  As an added gift we would see further stabilization in S&P 500 earnings as the major declines we've seen in "oil patch" earnings would likely stop and could possibly improve.  Oil in the $45-55 dollar range would likely not put extreme upward pressure on gas prices so its impact on consumers wallets would probably not be too dramatic.

We've possibly also seen some sort of a relief rally on Mrs. Clinton's debate performance.  Prior to the debates there was growing concern amongst her supporters that Mr. Trump was gaining on her to the point that the election was perhaps becoming a more close thing than they were comfortable with.  This anxiety likely leaked into the markets.  As I have said in the past, investors may have no love for Mrs. Clinton but they at least have some ideas of her policies and what her Presidency might look like.  Her performance the other night likely assuaged some of those concerns.  I'll repeat what I said the other day.  "While I think Mrs. Clinton won the debate, Mr. Trump earned the right to continue to try to close the deal with the American people.  Mrs. Clinton did not knock him out of the box or did he implode on his own.  I'm guessing that last nights debate  probably didn't change the undecided vote enough to start swinging the election to one of the two.  Both survived and  this will be continued in round two.    My guess is the next debate will be uglier and more personal."  The New York Times also wonders on whether the results of the debate caused a shift in the race.  We will have to see how the individual state polls come forth in the coming days in order to get a better sense of where we are now in the race so I think it's likely we could see more volatility before the election is settled.

Right now the markets like what they see although investors are fickle and we could see a short-term change tomorrow for all I know.  The 3rd quarter ends Friday so I continue to think there's a higher probability of support at least through the close on September 30th.  Portfolio managers are going to want to show good numbers at least through then.

Back Monday.

*Long ETFs related to energy and the S&P 500 in client and personal accounts.  Please note that positions can change at anytime without notice on this blog or any other electronic medium.