(Houston)

Oil is in the middle of a fit. The commodity just recently entered a bear market and it is has been swinging up and down based on confusion over whether it will be over- or undersupplied in coming years. The market is plunging today as OPEC announced yesterday that it sees a slowdown in oil demand coming as well as oversupply. According to OPEC, “The recent downward revision to the global economic growth forecast and associated uncertainties confirms the emerging pressure on oil demand observed in recent months”.

FINSUM: The oil market seems to be trying to get ahead of a recession. OPEC’s demand forecast has slumped considerably, which in our opinion is one of the major drivers of the bear market.

(San Francisco)

In what seems like a dramatic development considering all the other news that comes out on self-driving cars, people close to the situation say Waymo, Google’s self-driving car subsidiary, will launch an autonomous car service next month. The service is supposed to compete directly with Uber and Lyft.

FINSUM: Doesn’t this seem a little soon considering how recently fatal accidents were occurring? This could be a frivolous headline, but it could also be a major technological moment and potentially a good time to buy Alphabet.

(Washington)

One aspect of last week’s midterms that is not being discussed much, but has critical relevance for the wealth management industry is that fact that statehouses across the country swung from red to blue. Democrats won control of several state legislatures and governor seats across the nation. The impact on advisors could be large, as many more states are now much less constrained in their ability to urge for, and issue, their own fiduciary rules.

FINSUM: The massive “blue wave” did not materialize, but the gains were substantial enough that they could create some serious headaches for advisors that are in swing states. Perhaps even more concerning is how the blue House might push for a renewed federal fiduciary rule.

(New York)

As analysts and the market try to sort out how the new division in Congress will play out in markets, one beneficiary is becoming increasingly clear. Aerospace analyst Ron Epstein of Merrill Lynch had this to say the day before last week’s election, “The change to Democratic control of the House is the best scenario for defense spending. It points to upside in the defense budget. Gridlock keeps budgets intact, and defense is a bipartisan issue”. That argument is a bedrock of the new view that defense stocks are likely going to surge in the new Congressional environment. Epstein points out that aerospace companies are simultaneously seeing commercial and defense businesses growing strongly.

FINSUM: Earnings seem like they will stay in very good shape for the defense sector, and because budget changes look unlikely, the whole industry seems to be in for smooth sailing.

(New York)

One of the best indicators of stock market performance is actually in bonds. Because they trade based on fundamentals, high yield bonds tend to be strong leading indicators of stock performance. With markets swinging all over the place, now might be a good time to see what junk bonds are doing. The answer is that the sector looks to be in good shape, with spreads holding steady and no real sign of concern.

FINSUM: Junk is probably not going to really worry until we get very near, or into an inverted yield curve, as a recession would be rough on the high yield market.