WILL PRESIDENT BIDEN REMAIN THE DEMOCRATIC NOMINEE?  IS THERE ANY SIMILARITY TO THE MARKETS?

Will President Biden forego the Democratic nomination? Sixty-five percent of people polled believe he should. Only 37% of Democrats are satisfied that he is the nominee. Many Democratic leaders and pundits have suggested that he should drop out of the race.
CNN’s Van Jones stated the optics are horrific, commenting “A bullet could not stop Trump, but a virus just stopped Biden.”
Midafternoon the Washington Post reported that President Obama has told allies that President Biden’s pathway to victory was greatly diminished, and he believes his former running mate needs to seriously consider if his campaign remains viable.
Many are aghast [perhaps feigning to maintain credibility] that they were kept in the dark about the President’s health. A WSJ poll indicated that 71% of respondents indicated that the White House had not been “honest and transparent” about the President’s cognitive abilities.
How is this overcome?
It is often written the most obvious conclusions are those which are ignored.
What does the above have to do with the markets? Historically volatility in the Executive Branch increases market volatility.
Twenty-four years ago after the NASDAQ commenced its 18 month 78% implosion, many were questioning why the index had reached such lofty levels and why caution was not implored.
Today the concentration of monies in a handful of names is well documented. The S & P 500 is 31% comprised of Technology and 10% of Communication Services…aka technology. AMZN and TSLA are regarded as consumer discretionary, so their massive capitalization is not included in these numbers.
Writing it differently, five names comprise a record of over 28% of the S &P 500 and ten names comprise a record 35.7% of the S & P 500 capitalization, far exceeding the previous record by a factor of two.
The past ten days there has been a nascent transition into the Russell 2000 and value stocks. The valuation difference between the S & P 500 and the smaller cap brethren Russell 2000 is widely documented with the latter trading at the largest discount to the S & P 500 since at least 2000 according to Bloomberg.
Even with the recent volatility, AAPL is still worth more than Russell 2000 by 12.9%. Wow!
If the Magnificent Seven or the NASDAQ100 implodes in a similar fashion as the Dot.com fiasco of 24 years ago, will many on Wall Street be asked the same question that is now being asked of the White House…why were you not more transparent about the environment.
Commenting on yesterday’s market activity, equites reversed gains and ended lower by around 1%. The accepted catalyst was signs of economic weakness that overwhelmed optimism over rate cuts.
Bloomberg writes however that approximately fifty percent of the S & P 500 members posted gains as the rotation out of the mega caps continued.
Treasuries were essentially unchanged.
Last night the foreign markets were down. London was down 0.53%, Paris down 0.62% and Frankfurt down 0.68%. China was up 0.17%, Japan down 0.16% and Hang Seng down 2.03%.
Futures are flat. There is little reaction to the “extraordinary IT outage that is hobbling business around the globe.” Bloomberg writes “computer systems at businesses and public services around the globe failed after a botched update of a widely used cybersecurity program took down Microsoft systems.”
The 10-year is off 1/32 to yield 4.21%.