Last week’s economic calendar was the biggest of the year and this week’s is the lightest.  In the absence of important economic news and earnings, where will financial media turn to fill that space and time?  The Presidential election campaign is providing a lot of zest as well as a little substance. I expect financial pundits to be asking:

What Does the Election Mean for Financial Markets?

Prior Theme Recap

In my last WTWA I predicted that attention would focus on whether the improving economy could support stock prices.  Despite political events, that was a main theme of the week, with many observers noting that the data did not seem to support the widespread worries about a recession.  Things were “less bad” than thought, and maybe even getting better.  Friday’s employment data sealed the deal.  There was not much additional gain in the overall market, but value stocks and economically sensitive names did very well.  You can see the story in Doug Short’s weekly chart.  (With the ever-increasing effects from foreign markets, you should also add Doug’s World Markets Weekend Update to your reading list).

Doug’s update also provides multi-year context. See his weekly chart for more excellent charts and analysis.

We would all like to know the direction of the market in advance. Good luck with that! Second best is planning what to look for and how to react.  That is the purpose of considering possible themes for the week ahead.  You can make your own predictions in the comments.

Personal Note

I will be traveling next weekend and might not be able to post.

This Week’s Theme

With a very light economic calendar and earnings season winding down, how will the punditry fill the air time and blank pages?  One solution is to look for raucous entertainment that has a little market content as well.  These stories were already grabbing attention last week after the (ahem) spirited GOP debate and Super Tuesday results.

As always, I want to emphasize that I write about investments, not politics.  Sometimes the two intersect.  I try to show how investors should use knowledge about candidates and policies for profit, even if their personal opinions differ from the likely winners.  (See today’s Final Thought).

WTWA starts with identifying the upcoming theme.  I do not get to choose what the media should cover!  This week, I expect a focus on the Presidential election, with people asking:

What does the election mean for financial markets?

Barron’s reached a similar conclusion with a cover story asking whether Trump or Clinton was better for investors.  Some might be surprised at their conclusion.  This table summarizes their opinion about the key policy differences:

Viewpoints

Election coverage by financial sources includes the following:

As always, I have my own opinion in the conclusion.  But first, let us do our regular update of the last week’s news and data. Readers, especially those new to this series, will benefit from reading the background information.

Last Week’s Data

Each week I break down events into good and bad. Often there is “ugly” and on rare occasion something really good. My working definition of “good” has two components:

The Good

On balance the important news was pretty good last week.

One negative was the drop in hourly wages.  Business Insider has the whole story in thirteen charts from Deutsche Bank.  Many critics of employment gains point to the U-6 rate as a better read on conditions.  It has been improving rapidly, suggesting less slack in the labor market.