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Markets Ripped On Big Valuations As Election Bell Rings!

“Politics is a blood sport.” Aneurin Bevan

Today is Halloween. Where does it come from? According to Brittanica, Halloween’s origins can be traced back to the ancient Celtic festival known as Samhain, which was held on November 1 in contemporary calendars. It was believed that on that day, the souls of the dead returned to their homes, so people dressed in costumes and lit bonfires to ward off spirits. In this way, popular Halloween tropes such as witches, ghosts, and goblins became associated with the holiday. With this history, it is interesting to see what Halloween has become, especially in the United States. It is a holiday with a tremendous amount of spending associated with it, especially for candy and costumes. The term trick or treat is famous for being used on Halloween. For investors, it was certainly a week of trick, definitely not a treat (unless you were short), and just as important, could become quite scary in the immediate future.

From an event perspective, in was quite busy. Big tech reported on Thursday afternoon with Apple, Amazon, Google, Facebook, and Twitter all reporting how much revenue growth and how many billions they made. In addition, the CEO’s of Facebook, Google, and Twitter appeared before the Senate to explain their side of the story on restricting speech on their platforms, specifically from one political party (which one do you think it is?). Elsewhere, AMD bid $35 billion to acquire Xilinx while LVMH and Tiffany’s agreed to slightly lower the purchase price of their deal. Blackstone bought Self Storage for $1.2 billion and in the oil patch, Husky and Cenovus announced a $3.8 billion dollar transaction for efficiencies in the Canadian oil sands area.

In the cable and media industry, leaders Comcast and Charter both reported big gains in broadband subscribes with Charter also adding to video and mobile subs as well. Comcast was hurt by it’s Universal division, weighed down by theme parks and their attendance restrictions. Universal owns Universal Studios in California, and the industry association is considering suing the Governor, Gavin Newsome, and the state of California, for the extreme severity of the Covid mandate and inability to open their parks. Mr. Newsome has also placed some interesting rules on California citizens for Thanksgiving, which is consistent with other Democratic Governors and their ability to overreach any way they can. Mr. Newsome and his allies in Nevada, Washington, and Oregon, along with the eligible bachelor in New York, have banded together to announce the states won’t allow vaccine distribution until the drugs can be vetted by their health leaders. Apparently, the FDA and it’s officials aren’t as qualified as those in these states. Since we have brought up the political realm, it is appropriate to bring up the eight hundred pound gorilla in the room, that being the 2020 election.

Last week, I mentioned the role of raising money during this cycle and the advantage Democrats had on Republicans. I neglected to point out, and it is always a crucial consideration, the efficiency of the capital and how it is allocated. The two parties have vastly different approaches. The Democrats have spent the majority on advertisements everywhere and on everything. The Republicans used their money on building a grass roots organization which has gone door to door over the last six months. Totally different approaches and we won’t know their effectiveness until next week, at the very earliest.

If ever there was an election which exemplifies the blood sport nature of politics, the 2020 campaign is it. It is as hostile as any election in my lifetime, and in reading and teaching U.S. history, it will go down as one of the most contentious in our nation’s history. U.S. politics is littered with very confrontational elections, so it is in the nature of our country to fight hard for leadership and control of the decision making bodies. With respect to the current occupant in the White House, he recently has accomplished a great deal regarding peace in the Middle East. Specifically, Israel has signed peace agreements with two Arab countries (United Arab Emirates and Bahrain) for the first time in decades. More are believed to be on the way, including potentially Saudi Arabia. Foreign policy was a topic that was not brought up during either of the two debates, but global warning was repeated. With Wall Street and big tech funding the Democratic campaign, and the media 99% an arm of the Democratic party, yes, indeed, Mr. Trump is facing plenty of obstacles in trying to get reelected on Tuesday. So what are his prospects?
With polls all over the place and statistics and percentage of voters of every demographic group being analyzed by thousands of strategists, it appears Mr. Trump needs to pull an inside straight again. Many observers see a few battleground states determining the outcome, especially Pennsylvania, Wisconsin, Michigan, Arizona, and maybe Iowa. If Trump does not win Florida, Texas, and North Carolina early, it will be an early night for us all, heaven forbid. If results come down to one or two states, the mail in ballot and voter fraud issue will take center stage and then the lawyers will take over. Of course, with Mrs. Barrett providing a majority on the Supreme Court, state election rules will be appealed to the highest court. Precedent shows state legislative election law having definitive power over judicial rulings, but the results have to be so close that any contested state winds up being sent to the highest robes. Essentially, if it is close, we won’t have a winner next week and probably won’t have one until 2021. Blood sport, indeed.

Thank you for reading the blog this week, and if you have any questions about investing, please email me at information@y-hc.com.

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Yale Bock, Y H & C Investments, its clients, and the family of Yale Bock have positions in the securities mentioned in the blog,  Investing in securities involves risk and the potential loss of ones principal.  Past performance is no guarantee of future results.  All investment decisions should be considered with respect to ones risk tolerance, return objectives, liquidity needs, tax considerations, and one’s overall financial situation.  The fact that Yale Bock has earned the right to use the CFA designation does not mean Y H & C Investments will outperform broad market indexes.

 

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