Election Day Nears – 11/2/12

President Obama and Governor Mitt Romney have three more days to get their message out to voters as Election Day nears.   According to the polls, this election is too close to predict.  However, a few politicians from both parties are actually predicting that the polls are misleading and they are predicting a landslide, suggesting the polling data may actually be skewed.  We will have to wait until next week to find out the real results.  One thing that is certain is that voters seem very engaged in the election and it will be interesting to see how it all turns out.  We will communicate our overall strategy for our client portfolios once we have more clarity on the real election results.

Meanwhile, the U.S. economy is quietly starting to show more meaningful progress.  The employment report that was released this morning indicated 171,000 jobs were created in October.  This was much better than the estimates.  However, the unemployment rate rose to 7.9%, up from 7.8% in September, as more people entered the workforce, possibly due to improved confidence that they may be able to find a job.  In order to reduce the unemployment numbers, we will need to see over 200,000 jobs created per month over an extended period of time.  This seems like a tough number to reach right now, as many corporations simply have put investment and hiring decisions on hold due to the uncertainty over the elections, regulations, taxes and the fiscal cliff issue.  The question in their minds is; which candidate will provide a boost to CEO and small business confidence in order to have them get out of “bunker” mode and back to taking risk and investing for the future?  The market and the economic numbers in November and December will be impacted by the election results and we will continue to review our portfolio strategy and make adjustments as needed.

Super Storm Sandy hit the shores of the Northeast this week and caused devastation greater than anyone could have anticipated.  Our thoughts and prayers are with the millions of people without electricity, especially with the weather getting colder this weekend.   Most investors remained calm and handled this disaster better than expected.   Perhaps having the markets closed on Monday and Tuesday allowed investors to digest the real ramifications the storm will impose on the economy and corporate earnings.   In many cases, natural disasters of this magnitude, while catastrophic, can actually spur increased economic activity as people from all over the country have been deployed to help get houses and infrastructure rebuilt and electricity restored.  We will continue to monitor these developments closely.