Morning Report: No decision yet

Vital Statistics:

 

  Last Change
S&P futures 3414 50.6
Oil (WTI) 38.61 1.01
10 year government bond yield   0.77%
30 year fixed rate mortgage   2.87%

Stocks are higher as the election votes come in. Bonds are up after a wild night.

 

As I type this, the count in Michigan has narrowly gone to Biden, after leaning Trump all night. The remaining undecided states are MI, WI, PA, GA, NV, and NC. MI, WI, and NV are leaning Biden, and PA, GA and NC are leaning Trump. If those final results hold up, Biden wins.

The Senate so far is looking unchanged, although it hasn’t been declared either way. Same with the house. The only takeaway is there was no blue wave that the media had been trying to create for months. If the Senate stays Republican, we will have divided government no matter who wins, and that is good for both stocks and bonds. A huge stimulus bill with a bailout for the big broke blue states probably isn’t in the cards.

One thing to keep in mind, is that with all the expected recounts, we probably won’t have a definitive answer on the election for possibly weeks.

 

If Biden wins, the most likely change will a more aggressive regulatory state. My suspicion is that nothing changes with Fan and Fred, and the common stock for the GSEs will remain a litigation lottery ticket. I don’t think anything changes with the Fed.

 

Mortgage Applications increased 3.8% last week as purchases decreased 1% and refis increased 6%. The average rate ticked up a basis point to 3.01%.

 

The economy added 365,000 jobs in October, according to the ADP Jobs report. The Street was looking for around 750,000, so this is a miss. Economists are forecasting an increase of 530,000 jobs in Friday’s jobs report. “The labor market continues to add jobs, yet at a slower pace,” Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said in a statement. “Although the pace is slower, we’ve seen employment gains across all industries and sizes.”

 

 

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