The elections are coming up this Tuesday and this has us quite nervous. Animosity is running high and so are the stakes. The equity markets have been very volatile this October and we think the biggest reason for the volatility is politics. Yes, interest rates are moving up but a 25 or 35 basis point increase in the 10-year US Treasury yield is hardly anything to be concerned about. Nor do we think the trade tensions between the US (with support from other western countries) and China is the driver of uncertainty. Yes, the cost of doing business is higher, but the big tariffs have not kicked in. Most items imported from China have a 10% tax on them. The 25% tax will not kick in for a few months. Ultimately, we think everyone knows it is in the interest of both countries to strike a deal. So we think a deal will be struck.
