You should sell before the Elections and here is Why

You should sell before the Elections and here is Why
by, David Frank, Economist

The US stock markets are very overinflated right now. Both of the candidates to sit in the White House, Hilary Rodham Clinton (D) or Donald Trump ® provide and number of real dangers and a viable catalyst for a selloff if either wins.

If you decide to wait, as you are unsure as to what to do right now, then you should sell after the election concludes Wednesday at midnight. There could be, at the very least, a 25 percent drawdown in the US equity markets out of the gates the day after.

Let’s talk about the possible Clinton administration first and the perils it will face off the bat. There will be non-stop criminal investigations into her emails as well as a constant stream of bad information from WikiLeaks. This will lead to a divided House and Congress which will be a virtual killing field for any of her policies. She will enter the White House, battered and bruised and lacking in legitimacy to accomplish anything on her agenda.

There will be a lot of acrimony should she win, not only from the citizenry but other politicians, and this could last up till one year causing instant paralysis. There will be any number of house committees doing investigations from WikiLeaks data to her misuse of an email server. This would plague the early days of her administration, should she win. This means a stalled Federal Reserve on its decision making into fiscal policy which could lead the country into a new recession.

The Internal Revenue Service (IRS) said consumer revenue was up a mere one percent last year and last quarter, was down four percent. In the five months since May, payroll withholding was barely keeping up with wage inflation. This means work hours are not happening. From here this could paralyze congress as the debt ceiling is about to expire again. There is a central bank that is already dragging its heels on fiscal policy. The United States equity markets that have been pretty flat for over 600 days. This is a recipe for a crisis. We are in the same place, now, that the markets were in in December 2014. There is a lot of risk so what is the reward?

The S&P 500 has gained maybe a little over one percent in two years and the Down Jones Industrial Average (DJIA) is up around 0.70 percent. That is anemic.

Should Donald Trump, win then there will open partisan warfare. An administration renegotiating trade deals, NAFTA, closing down immigration, putting an America first isolationist policy on the table. A total disaster. If Trump wins, then all bets are off and the markets are going to see turmoil.

If Trump wins, we can liken his victory the San Francisco Earthquake of 1906 because that will be the effect on the stock markets and the nation’s already anemic economic recovery.

It might be a good time to sit on cash and gold. At least for the next six months to one year as equities are going to take a beating. No matter who wins the race for the White House and sits in the Oval Office, there is going to be a bumpy ride for stocks, bonds and least, but not last, the Forex markets as investors flee to safe haven assets.

from Bullish University http://ift.tt/2fdzFvl

from Bullish University http://ift.tt/2fQ9VZx