Political developments this year are a greater factor than usual in global markets, as the increasingly vicious slugfest between Donald Trump and Hillary Clinton enters its final stretch. Wall Street hates uncertainty, and this presidential contest is the wildest quadrennial race for the White House since 1968.
During the violent and fateful year of 1968, GOP nominee Richard Nixon appealed to disaffected white working-class Americans by running as the "law and order" candidate. Nixon's media adviser at the time was none other than Roger Ailes, who until his recent resignation in disgrace was chief of Fox News, the network that has given an ample megaphone to the GOP's law-and-order candidate Trump. The more things change ... et cetera.
The Democratic and Republican conventions are in the rear-view mirror; the balloons and bunting are packed away. But there are still plenty of events on the docket this week to keep investors occupied. Here's a rundown of what to watch in the days ahead. Below, we also unveil an innovative investment method that makes money in good times and bad and is perfectly suited for today's turmoil.
Corporate earnings remain in the spotlight. At the start of the second-quarter earnings season, research firm FactSet predicted a 5.1% year-over-year decline in S&P 500 earnings, but operational results are shaping up far better than expected, with the latest projections calling for a smaller decline of 2.4%. This modest optimism has been pushing up stock prices, although recent declines in the broader indices seem to indicate that investors are running out of justifications for putting money into overvalued stocks. If earnings stay relatively robust, the stock market's momentum should continue. Key earnings reports this week include:
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For economic data this week, the focus will be on jobs. Keep your eye on the U.S. Department of Labor jobs report scheduled for release on Friday. Analysts expect the government to report that U.S. employers added 175,000 jobs in July and the unemployment rate held firm at 4.9%.
If this upbeat jobs estimate holds true, it would come on the heels of the blockbuster jobs report in June, when 287,000 jobs were added, far above the estimate of 180,000. The latest unemployment claims report, scheduled for release on Thursday, will give a hint of what to expect on Friday. Good news on the employment front would provide the fuel that this sputtering stock market rally needs. It would also give the Federal Reserve the political cover to raise interest rates later this year.
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