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Arrowhead Asset Management Investment Update (October 10, 2016)

All Global Market Metrics - Except One - Point to Clinton US Presidential Win

One day after Sunday night's Presidential debate - and three days after the release of Trump's sexual predator-like audio/video tape from 2005, all "market metrics" now point to a Clinton victory -- in the debate and on Election Day -- except for one. CNN Money details what the market tests say at the start of each week in October. Here's the latest run down:

"It's the economy, stupid"

The Dow 30 stock index is up over 110 points today and the S&P 500 gained 0.5%. It's not the rally of the century, but it's strong enough to indicate that Wall Street investors think Clinton won the bitter second debate and will triumph on Election Day. Trump is so unpredictabe about economic matters, Wall Street wants to see Clinton in the White House.

The number crunchers over at Moody's Analytics have a special model to predict who will end up in the White House based on how the economy is doing. The model has correctly predicted the winner every election since 1980.

This year, the model points to a solid Clinton win because of a relatively healthy economy.

Only two factors could change the model enough to point to a Trump victory: if gas prices spike above $3 a gallon, or President Obama's approval rating falls substantially.

Right now, Obama's approval rating is at 55%, the highest of his second term. And the average price of gas is $2.25 a gallon, according to AAA. That's up a few cents, but it's not a major jump.

The Mexican factor

It might sound odd to look at Mexico's currency for clues on who will win the U.S. presidency, but the Mexican peso has become a new proxy for the Clinton v. Trump matchup. At the moment, it's signaling a Clinton victory.

Why? It all comes down to Trump's comments on Mexico. He wants to build a wall between the U.S. and Mexico (that he wants Mexico to pay for), renegotiate NAFTA and come down hard on U.S. companies that move factories, and supposedly jobs, south of the border.

So every time investors think Trump's chances of winning improve, the Mexican peso falls. And when Wall Street believes Trump doesn't have much of a shot at the White House, the Mexican peso rises.

After the first and second debates, the Mexican peso jumped in value.

The yellow brick road

Take a peek at gold. The price was creeping up all year long as investors got nervous about China, Brexit and then Trump winning the U.S. election.

But gold prices have been falling lately. Prices plunged 3% alone on Tuesday. The yellow metal is now trading below $1,300 an ounce for the first time since June.

Some experts think that Trump's recent woes may be a reason for gold's slump. Investors seem a little less worried he'll win.

Trumped Market

There's just one market metric pointing to Trump: the S&P 500 test developed by Sam Stovall, a market expert at CFRA Research.

How the broader market performs between August 1 and October 31 has been an reliable predictor of who ends up in the White House:

Given the strong broader bull market we have seen in S&P 500 (the main U.S. stock market gauge) and if it remains up for that critical three-month period, Clinton will win. If it falls precipitiously, Trump could win.

"I remind investors that these type of studies should be viewed as a guide and never gospel," Stovall told CNN Money over the weekend.

CNN Business, October 10, 2016

* A Wall Street Journal poll of surveyed voters showed Hillary Clinton now with an 11% lead among all voters and a 20% lead among female voters.

Strongly suggested reading (written by a smart and thoughtful Christian conservative):

Republican Strategist Ana Navarro on CNN:

Very clever post-VP debate video put out by Clinton campaign:


Current Fidelity Holdings

Below are our current holdings and corresponding percentages in ourprimary Fidelity account(s) as of today, October 10, 2016:

Large Fidelity IRA / Brokerage portfolios:

S&P 500 Equal Weight (RSP) 5%
S&P 500 Growth (IVW) 5%

Technology (XLK) 5%
Industrials (XLI) 5%
HIgh Yield Bond (HYG) 5%
Biotechnology (XBI) 5%

Regional Banks (KRE) 5%
Europe Stock (Currency Hedged) 5% 
Ecolabs (ECL) 3%
PayPal (PYPL) 3%
Qorvo (QRVO) 3%
Red Hat (RHT) 3%
Tesla (TSLA) 3%
Whole Foods Market 3%
Unilever (UN) 3%
Money Market cash (44%)

Small Fidelity IRA / Brokerage portfolios (under 50K):

S&P 500 Growth (IWV) 10%
Biotechnology (XBI) 20%
Money market cash (70%)

Fidelity ORP/403b Portfolio holdings

Select Environmental Services fund 10%
Select Multimedia fund 10%
Select Software fund 10%
Contra Fund 10%
S&P 500 10%
Goverment Money Market fund 50%

* Please contact us if you have any questions about your Fidelity account holdings. 



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