Volatility Is Low Heading To U.S. Midterm Elections

Good Morning Everyone!

Today is midterm Election Day in the U.S. The S&P has historically outperformed the market in the 12-month period after a midterm election, with an average return of 16.3%. Let’s hope the trend is our friend!

Prices as of 4 pm EST, 11/7/22; % YTD

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MARKET UPDATE

Midterms

Republicans are favored to take the House
U.S. Senate is a dead heat

November 15

Trump intentions on 2024 election

VIX lowest volatility since mid-September

This will not last
Midterms tonight
CPI data on Thursday.

Crude 91 -1%

A little weaker this morning on news that there’s a total of 7,000 covid cases in China, the most in 6 months

TikTok, Meta META

Brendan Carr, a Republican member of the Federal Communications Commission
Reiterated his view that TikTok should be banned in the U.S.

Heading into the midterms, it’s interesting to note……

5-year total return of the S&P 500 Energy Sector and QQQ 0.10%↑ (Nasdaq 100) has now converged
The outperformance of the Energy sector started exactly on the date Biden was elected in 2020 (green line)
Recall, one of Biden’s first moves was to cancel the Keystone XL Pipeline

Used Cars, Manheim Index

October at 200
Down 2.2% month-over-month
Pickup trucks down 1.3% month-over-month
This is interesting:
- Besides temporary shocks, 2008 and 2020, there has been no sustainable downturn in used car pricing in 20 years