Clinton Victory Means a Peso Victory


1) Mexican Peso Jumps

The big post-election meme on Wall Street today is the jump in the Mexican peso.

It's up 1.2% against the US dollar today on Hillary Clinton's strong showing in last night's debate.

Donald Trump is not viewed as peso-friendly, to say the least.

But keep in mind that over the past few months, broader equity markets haven't shown a tendency to favor one candidate over the other.

That may change as we get closer to the finish line, especially around the second debate on Sunday, October 9.

2) Biotech Is Fine

Biotech (IBB) is doing well this morning.

In recent history, biotech has done better when Trump was favored, so this is an interesting development — especially since Gilead (GILD) was downgraded.

3) Gold Sinks

Gold is taking a big hit this morning, and some of that is attributed to Clinton's win.

Trump's wild-card nature is seen as more favorable for gold, even though gold's status as a safety asset is in question.

Chinese gold imports from Hong Kong also hit a 7-month low.

However, keep in mind that the junior miners (GDXJ) are actually slightly outperforming the metal. GDXJ is essentially a high-octane way to play the metal, so I'm surprised it's not doing worse.

Stay on the lookout for a possible bounce higher in gold.

4) Crude Games

It seems like oil bulls keep getting carried away on chatter about production freezes/cuts, and they always end up getting burned.

I'm starting to think we should ignore all oil headlines until we get official word on the outcome of the meeting in Algiers.

For now, the chances of a production freeze or cut look pretty slim.

5) Economic Data

Today, we saw in-line S&P home data, a Markit Services PMI beat, a consumer confidence beat, and a miss on the Richond Fed.

Overall, the economic data trend is still down.

As you can see in this chart of the Citi US Economic Surprise Index, economic data strength relative to expectations is right around Brexit levels.

The difference between now and then is that the market had more or less price rate hikes out. Now it's pretty much 50-50 as to whether the Fed will move in Deceember.

If the data trend continues to weaken, we could very well see the dollar dip and gold rip.

We have Durable Goods on Wednesday, GDP on Thursday, and Personal Income/Spending plus the PCE Deflator Friday.

So we could see some real fireworks!