Monday's Clinton–Trump debate was a swing and a miss: trader

By Alan Valdes, director of floor operations at Silverbear

Swing and a miss

It was billed as the debate of all debates. Forget Lincoln-Douglas or Kennedy-Nixon, this was going to be the debate for the ages. On one side, you had “The Donald”—a newcomer to the political arena, the shoot-from-the-hip and a “no holes barred” billionaire Republican—versus Hillary Clinton—the old pro, a seasoned Democratic politician trying to become the first woman to hold the highest office in the land.

Everything was in place with 100 million viewers watching, and the drama could not get any more intense. Would Clinton be able to stand for 90 minutes and not collapse? Could Trump not put his foot in his mouth? Would there be hand-to-hand combat between the two participants?

Well, we got zero, nothing, nada! There was no shouting, no hair pulling, no knockdowns. It was much too civilized for us traders on Wall Street.

How the markets are reacting after the debate

The markets saw the debate as a draw. Futures markets—here and in both Asia and Europe—at first rallied, which would indicate Hillary was up on points. However, by the end of 90 minutes, they had given back most of those gains. Overnight, that “dead-cat” bounce had turned negative.

Some of that negativity had to do both with Deutsche Bank and Volkswagen. The one market that traders were keeping a eye on was the Mexican peso. Like the futures markets, it rallied at first, but by the end of the debate, it had given up most of its gains.

Today, we had a strong numbers from the government. The consumer confidence index hit a high not seen since the Great Recession, coming in at 104.1 and beating economist predictions of 99. Since our economy is powered by consumer spending, this is a critical number traders watch. The S&P Case-Schiller 20-City Composite Index came in line at 5.0%, while expectations were for 5.1%. Saudi Arabia has seemed to dash hopes of any freeze in outputs, as US crude oil has retreated—down -$3.14 a barrel to $44.26.

With no knockout punch from either candidate last night, expect the markets to continue
with high volatility and low volume until we get some certainty on the direction the country
will be heading over the next four years.

In the end, it would appear that Lincoln-Douglas, at least for now, is still the debate for the ages.