Morning Minutes 11/06/2018

Steady Markets Await Midterm Election Results
SIA Wealth White BG

November 6, 2018
8:45 am EDT

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

World markets have been digesting yesterday’s moves overnight and into this morning. Many of the markets that moved up Monday such as US treasury yields and natural gas have paused at higher levels, while some markets that moved downward like crude oil have paused at lower levels. Speculation on a possible Brexit deal this month has Sterling up slightly and the FTSE down slightly, but that comes and goes. The VIX volatility measure is holding steady near 20, elevated but not excessive.

Dow futures appear set to give back some of yesterday’s gains, following a 190-point gain with a 45-point loss. It’s midterm election day and investors appear to be in a holding pattern waiting on the results. The market appears to be expecting and pricing in a win in the House for the Democrats and for the Republicans to keep control of the Senate.

It would likely take a significant surprise to move broad indices, commodities or the US Dollar meaningfully. The results, however, could have a significant impact on regulated or politically sensitive sectors of the economy such as health care or construction, and multinational companies exposed to trade relations like industrials and autos. Financial services could get knocked around this week with Tuesday’s election potentially impacting regulation, but Thursday’s Fed meeting likely to update the outlook for interest rates.

Earnings continue to roll out in Canada this week. Today Bausch Health could be active after the company reported mixed results. Sales of $2.13B were down from $2.21B a year ago but better than the $2.08B the street was expecting. Management maintained its full year sales guidance of $8.15B to $8.35B. Thomson Reuters posted mixed results. Sales of $1.29B were short of the $1.32B street estimate Earnings per share of $0.11 were down from $0.27 a year ago but better than the $0.03 the street had been expecting. Auto parts producer Linamar and a number of mid-cap miners are also reporting results today.

SIA Wealth In The Media:

Chief Market Strategist Colin Cieszynski was guest co-host on BNN Bloomberg’s The Street Monday morning. Links to his main replay segments are below:

Stocks to move higher but remain volatile: Market strategist

Market positioning in a rising rate environment

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