“Happy Days Are Here Again” is a song copyrighted in 1929 by Milton Ager (music) and Jack Yellen (lyrics). I wonder if the lyricist is related to Fed Chair Janet Yellen? The song was featured in the 1930 film “Chasing Rainbows.” The lyrics are very upbeat: “Happy days are here again / The skies above are clear again / So let's sing a song of cheer again / Happy days are here again.”
The happy tune became the campaign song for Franklin Delano Roosevelt's successful 1932 presidential campaign. It was played at the Democratic National Convention that year, and went on to become the Democratic Party's unofficial theme song for many years. The song is also associated with the repeal of prohibition, which occurred shortly after FDR was elected and was greeted with signs saying “Happy days are beer again.”
Yesterday was a happy day, with the S&P 500 rising 2.2%, breaking the previous nine-day losing streak (Fig. 1). The financial media attributed the rally to the FBI’s announcement on Sunday that Hillary Clinton had dodged yet another investigation of her emails. The market’s nine-day losing streak started on October 25, and worsened after the FBI announced its latest investigation on October 28. Obviously, stock investors and traders favor Hillary Clinton over Donald Trump because they prefer the known status quo rather than the alternative.
So yesterday’s happy day might be the beginning of yet another relief rally, which has been the modus operandi of the current bull market (Fig. 2). (See our S&P 500 Panic Attacks Since 2009.) That could happen if HRC wins today, especially if Hispanics turn out in big numbers to register their antipathy for Trump. If so, it will demonstrate how important this group has become politically, and confirm the obvious: Attacking large groups of people is a sure way to lose an election in the United States. Of course, HRC did attack the “deplorables,” but there might not be enough of them to carry DJT into the White House. In any event, we will have much more data on this question tomorrow.
Of course, the polling booths haven’t opened yet as we send out this Morning Briefing. The market might not react so well tomorrow if HRC wins today and the Democrats win both houses of Congress. Gridlock tends to be bullish for stocks. A clean sweep by the Democrats would give them too much power to do mischief.
In any event, yesterday’s relief rally reflects lots of recent good economic news that hadn’t been discounted because of the political uncertainties hanging over the market as the elections approached.
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