Why risk trades are higher after the US election

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It’s the same as any election

Almost every elections follows the same script. The run-up is filled with angst, division and most of all, fear. By definition elections create uncertainty and markets dislike uncertainty.

As I wrote yesterday: “My rule of thumb on elections is that the hype and fear never matches
the reality. There’s all kinds of talk about what every outcome means
for the market but the general rule is that once the smoke clears,
everyone takes a sigh of relief no matter the outcome.”

Today we’re seeing the sigh of relief. The sun came up again and everyone went back to work. S&P 500 futures are pointing to a 24 point gain at the open and the VIX is down 12%. Commodity currencies are higher and the US dollar is lower.

The anticipated gain in stocks will bring the S&P 500 back above the 200-day moving average and there’s still plenty to like about the US and global economy. The 55-dma will be the next target.

S&P 500 futures:

ForexLive

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