361 Capital Weekly Research Briefing: Train Wreck

October 10, 2016

Train wreck…

There was only one story over the weekend and it had nothing to do with the Judd Apatow movie. Any GOP candidate with a car hooked to the Trump train has now derailed. With the RNC pulling ad support, ground troops defecting and voters pulling up their yard signs, the Trump locomotive will be going at it alone. Many House and Senate members began to defect away from the POTUS candidate over the weekend, and it is likely that party leaders will shift all efforts to trying to keep one chamber of Congress. There won’t be new good polling data until mid-week which should reflect both Friday’s video and Sunday’s debate. But it does not take a rocket scientist to determine how the new polls will shift. I agree with my wife, and most other voters in this election, and would like to hit the ‘Reset’ button so that we can put both political parties’ derailments behind us. Hear me now David Fincher, I dare you to top real life in House of Cards  season five.

Before Twitter blew up Friday afternoon, the Department of Labor did post the monthly Jobs numbers in the morning…

A Non-Farm Payroll gain of +156k was about as exciting as your typical library hall banter. But actually, boring growth is good for the risk markets because it keeps the Fed in a healthy debate and interest rates in check.

( WSJ )

For the full week, it was a more difficult one for risk as falling Bond prices took center stage…

ECB taper tantrums led the worries which created ripples into the Forex and Commodities markets. Equity yield proxies (Utes, REITs, Staples) again suffered, while Bank and Financial stocks enjoyed the upward glide in rates. Gold, Silver and Mining took a shovel to the head with the big move up in the U.S. Dollar and the ECB backing away from stimulus. Emerging Markets outperformed—helped by both rising Energy prices and specific issues in both Brazil and China.

(Prices as of 10/7/16)

Crude Oil continues to make gains as OPEC’s collusion to raise prices gathers steam…

Stability in Crude Oil taking prices above $50 is a significant positive for Energy credits…

@jsblokland: ICYMI! The US high yield energy spread has tightened by almost 1000 bps since #oil bottomed in February.