Friday November 4 Daily Market Primer

It’s “risk off” as election angst sets in, with stocks down and bonds up as we have seen this week, and the press loves to point out over and over that this is an 8 day loosing streak. The S&P was down .4% and the NASDAQ was down .9% yesterday.  WTI is back down below $45 on lack of a supplier deal on cuts, and Brent is at $46, for a drop of about 10% this week.  Nothing but red in international markets as all eyes focus on the US election on Tuesday.

October nonfarm payrolls are out, and the US economy created 161K jobs which is slightly below the Reuters survey number of 175K.   The Bloomberg survey nailed it at 175K expected.  The unemployment rate fell by .1% to 4.9%.  Closely watched average hourly earnings rose by 10 cents for the month, and are showing a 2.8% year over  year gain.  The September number was revised up to 191K, which is pretty strong.  How doses that compare to recent months?  Here are the monthly job numbers back to May (before revisions).  US futures flipped just slightly positive on the jobs number J.

	LAST	CHANGE	% CHG
DJIA	17,930.67	-28.97	-0.16%
Nasdaq	5,058.41	-47.16	-0.92%
S&P 500	2,088.66	-9.28	-0.44%
Russell 2000	1,156.89	-5.64	-0.49%
Global Dow	2,390.53	-23.08	-0.96%
Japan: Nikkei 225	16,905.36	-3.19	-1.34%
Stoxx Europe 600	328.37	-3.19	-0.96%
UK: FTSE 100	6,685.62	-104.89	-1.54%
CBOE Volatility	21.95	2.63	13.61%
Australia: S&P/ASX 200	5,180.80	-44.80	-0.86%
China: Shanghai Composite	3,125.32	-3.62	-0.12%
India: S&P BSE Sensex	27,274.15	-156.13	-0.57%
France: CAC 40	4,370.84	-40.84	-0.93%
Germany: DAX	10,248.00	-77.88	-0.75%
Italy: FTSE MIB	16,259.72	-160.18	-0.98%
Spain: IBEX 35	8,784.00	-95.90	-1.08%
U.S. 3 Month	0.369	0/32
U.S. 2 Year	0.806	0/32
U.S. 5 Year	1.255	1/32
U.S. 10 Year	1.796	5/32
U.S. 30 Year	2.583	13/32
Germany 2 Year	-0.632	0/32
Germany 10 Year	0.146	4/32
Crude Oil	44.78	0.12	0.27%
Brent Crude	46.28	-0.07	-0.15%
Natural Gas	2.939	-0.01	-0.34%
S&P GSCI	351.97	-0.32	-0.09%

Political and economic conditions in Turkey are deteriorating further, with arrests in parliament, bombings, a social media lockdown, and a record low lira.  Turkey is 1.2% of the MSCI Emerging Markets index.  GoPro fell 18% yesterday, on lower earnings and guidance, showing the danger of a one product company for the second time this week, following FitBit’s 30% drop.  Maybe GoPro and FitBit should merge.  Starbucks grew sales by 5%, citing their mobile order feature as one of the reasons.   I know that’s my favorite thing about Starbucks now.

Here are the latest composite polls from RealClearPolitics and FiveThirtyEight.  We are reaching “peak polling” at the end of the election and these are updated continuously.  At this point a 1.7 point lead on the RCP coposit is withing the margin of error, and the race looks too close to call. 

 With the polls so tight and after the experience of the Brexit vote, it is possible that the market is already discounting the possibility of both outcomes. 

Lets hope so.   Here’s the news: 

Jobs day

Today the Federal Reserve may get some of the further evidence it says it needs before hiking rates when payrolls numbers for October are released at 8:30 a.m. ET. According to a Bloomberg survey of economists, employers added 173,000 jobs in October, up from 156,000 the previous month. The survey also projects a 0.3 percent rise in wages in the month.

Election countdown

With only two trading days left before polls open in the U.S. presidential election, both candidates have evidence they can point to when saying they're going to win. For traders, flashbacks from the U.K.'s vote on the EU referendum in June have them preparing for a rough night. In Europe and Asia, investors are still backing Clinton to win, with one firm saying 80 percent of its customers' dollars are backing a victory by the Democratic candidate.

Oil under $45

A barrel of West Texas Intermediate for December delivery was trading at $44.62 at 6:09 a.m. ET as the commodity headed for its biggest weekly loss in almost 10 months. While Citigroup Inc. says that OPEC and Russia will probably reach a deal to reduce crude production, market indicators at the moment point to investor skepticism.

Markets drop

Overnight, the MSCI Asia Pacific Index fell 0.9 percent, while Japan's Topix index dropped 1.6 percent, completing its worst week since July. In Europe, the Stoxx 600 Index was 1.0 percent lower at 6:16 a.m. ET with banks leading the losses. S&P 500 futures were little changed after the index closed lower for the eighth day in a row on Thursday.

New low for the lira

The lira slid to a new low against the dollar, while Turkish bonds and stocks sold off this morning after police detained leading opposition Kurdish members of parliament and an explosion rocked the largest city in the nation's southeast. While Turkey suffers from its own problems, assets across emerging markets are also selling off ahead of Tuesday's U.S. election, with the MSCI Emerging Markets Index of shares extending this week's decline to 2.5 percent this morning. The S&P 500 looks to snap its losing streak. On Thursday, the benchmark index closed at its lowest level since July as it fell for an eighth consecutive session, something it hasn't done since the depths of the 2008 financial crisis. Europe's recovery remains "sluggish." Markit's final composite PMI figure for the eurozone — a measure of growth in the continent-wide economy — printed at 53.3 in October, down from the flash estimate of 53.7. "The weaker than previously indicated expansion in October raises doubts about whether the eurozone is breaking out of the sluggish growth phase seen throughout much of this year," wrote IHS Markit's Senior Business Economist Chris Williamson alongside the data. The euro is flat near 1.1100 against the dollar. Traders confused a baseball player and the head of the Bank of Japan. A trader tweeted about an "emergency press conference on Kuroda's resignation" and the other traders took that as a sign that Haruhiko Kuroda, the head of the Bank of Japan was stepping down. However, the tweet was about Hiroki Kuroda, the baseball player who was announcing his retirement. Luckily, the yen didn't have a notable move as a result of the mix up. The Japanese yen is little changed near 103.00 per dollar. The Turkish lira is at a record low. Turkey's government has detained 11 pro-Kurdish leaders and shut down access to social media within the country, the Financial Times reports. In response, Turkey's currency, the lira, is down 0.9% at 3.1444 per dollar, a new record low. GoPro crashes after missing earnings by a mile. The action camera maker reported a loss of $0.60 per share (-$0.36 expected) as net income plunged 330% versus a year ago to a loss of $84 million. GoPro shares are down about 18% in pre-market action. Starbucks beats on revenue. The coffee giant earned $0.54 per share on revenue of $5.71 billion as same-store sales for the Americas region climbed 5%. Shares of Starbucks are up 1.5% ahead of the opening bell. Stock markets around the world are lower. Japan's Nikkei (-1.3%) trailed in Asia and Germany's DAX (-0.9%) lags in Europe. The S&P 500 is looking at a 0.1% drop at the open. Earnings reporting slows down a bit. Duke Energy, Humana, and Madison Square Garden are among the names reporting ahead of the opening bell. Aside from the jobs report, US economic data is light. The trade balance will be released at 8:30 a.m. ET and the Baker Hughes rig count will cross the wires at 1 p.m. ET. The US 10-year yield is down 2 basis points at 1.79%. The Final Countdown Donald Trump, Hillary Clinton and their surrogates fanned out across the battleground states on Thursday with the same mission: to energize and turn out their voters in the presidential election. The intensity of the final push in the campaign reflects a tightening in the national and battleground-state polls. While such movement is typical at the end of a presidential campaign, both sides see a shot at victory—if they can get their voters to show up. We examine how the turnout battle in Ohio illustrates the ferocious competition between the two party’s ground games. Meanwhile, new WSJ/NBC/Marist polls find Mr. Trump holds leads in Arizona and Texas, two Republican strongholds where Democrats have hoped to gain an edge from fast-growing Hispanic populations, while he and Mrs. Clinton are in a dead heat in Georgia. The Brexit Blocker A U.K. High Court’s decision that Prime Minister Theresa May can’t trigger Article 50 without the approval of Parliament offers a potential opening to lawmakers to disrupt her Brexit plans and steer the country toward a “soft” exit that maintains stronger ties to the European Union and a more-open immigration policy. The government said it would appeal the verdict to the Supreme Court, which would hear the case in early December, under a predetermined timetable. If the ruling is upheld, lawmakers could delay the breakup process or even halt it. The ruling introduces new uncertainty in the process on a day when the Bank of England, explaining why a further cut in interest rates looked less likely, said it expected Brexit to weigh less heavily on the economy next year than thought. The decision also further clouds the horizon for big U.K. and European corporations. You can follow developments on Brexit every day by signing up for our Brexit & Beyond newsletter. Bitter Pill Federal prosecutors, after a lengthy probe, are nearing possible criminal charges for price-collusion in the generic-drug industry. The U.S. Justice Department could begin to bring cases before the end of the year. The specific companies that are a focus of the investigation weren’t immediately known. However, the Justice Department has sent subpoenas to several manufacturers of generic drugs and to some individual executives, seeking information about product pricing and “communications with competitors.” Those companies include Teva, Mylan, Dr. Reddy’s Laboratories, Taro, Endo and Actavis, which Allergan recently sold to Teva. The developments sent shares of generic drugmakers tumbling. In a separate probe, a group of state attorneys general are investigating generic-drug companies for price-fixing. And as criticism mounts, the pharmaceutical industry is spending millions of dollars to fight groups advocating lower drug costs. Will a Trump presidency help or hurt Trump Inc?  His business empire faces legal and financial threats, but brand Trump could flourish NOVEMBER 3, 2016

Stocks almost always rise before an election. Not this year.

Bond market and Fed are on the same page about U.S. inflation picking up.

Sex shops, bingo and sewerage define the new era of pension portfolios.

Is China making the same mistakes that crushed Japan's economy?

Spain shows it's on Ireland's path as Rajoy forms government.

Prepare for a flood of North Sea oil.

High-tech cows.

U.S. Productivity Jumped in Third Quarter, Trend Remains Soft

Volkswagen Seeks to Break Impasse Over Restructuring Plans

Family Feud at Louis Dreyfus, One of the World’s Largest Commodity Traders, Spills Into Court

At 5:26 a.m. ET the Turkish lira hit π -- or thereabouts -- to break an all-time record low of 3.1415 against the dollar. This sublime geometry masks some pretty worrying developments, in the country's politics as well as in the markets which, with the help of an ever-less plural media and cowed brokerage sector, are trying to decode them. Turkish households, who have traditionally been the biggest defenders of the currency at these levels, are either running out of foreign-exchange deposits with which to buy liras, or the will to do so. It may be the detention of 12 elected opposition lawmakers that is giving them pause for thought. These overnight developments helped the lira become the worst performing EMEA currency in a basket tracked by Bloomberg. As the EU candidate drew criticisms from officials in the bloc it has, for many decades, been trying to join, Turkey's Justice Minister sniped back at those who would dare get involved in the country's affairs. It was a rebuke reminiscent of the headline of the U.K.'s The Sun - “Who Do EU Think You Are?” that followed yesterday's Supreme Court ruling that Brexit had to have parliamentary, as well as mere governmental, oversight. As the two countries eye Eurocrats suspiciously from other ends of the continent, they might have more in common than they think.

Source: Bloomberg, BI, WSJ, CFAI Fin. Newsbrief, FT, RealClearPolitics.com, FiveThirtyEight.com