The First Wednesday in November

The Week Ahead

November 7, 2016

US elections are held on the first Tuesday in November, but how should traders react on the first Wednesday? In most scenarios, going against the initial knee-jerk response that would have been incorporated in overnight trading would look attractive.

Judging by recent correlations, a Trump win would be an obvious negative for the value of the Mexican peso (Chart).

US equities haven’t had quite as strong a fit, but since August, although one can’t prove cause and effect, the S&P 500 generally rallied on Clinton poll gains, and lost ground when her margin faded. More granularly, Clinton is seen as a plus for alternative energy stocks and less of an issue for multinationals than Trump, but a negative for coal producers, pipelines, some biotechs and others that might face a tougher regulatory environment.

Read more…