The first Presidential debate between Hillary Clinton and Donald Trump is scheduled for September 26.
I came to the conclusion that:
- The markets are trading as though Clinton has already won.
- As of this writing, polls have been narrowing in Trump’s favor.
- The consensus is that Clinton will win the debate.
- For Clinton to win the debate, the expectation bar is very high.
- For Trump to win the debate, expectation bar is very low.
On the other hand, because of the Clinton winning has high odds to being wrong. I consider a 40% probability that Trump upset the markets. My scenario is that SPX could move -/+ 5% on this news. Trade higher if Clinton does well and lower if Trump does well.
Key sector will be Banks, Industrials, Metals and Pharma including BioTech.
