Morning Meeting: the Day After

Good Morning.

President Obama captured a second term after winning a number of electoral-vote rich states, although Republicans won the North Carolina governors office from Democrat to take control of 30 US statehouse: the most since 2000.

As we said in yesterday's posts the focus was on the count to 270 college votes.

As per Bloomberg report: the Republican victories build on gains made two years ago, when the party's candidates rode a wave of economic discontent to capture 11 governor's offices from Democrats and reclaim a majority it lost in 2006. Its winners this year pledged to cut taxes and spur economic growth. There were 29 Republicans in governors' seats heading into yesterday's election, compared with 20 held by Democrats and one filled by an independent.

US stock futures fell sharply when early polls indicated that Obama was likely to be re-elected, although after Obama's victory became clear futures were off their worst levels: DJIA Dec futures fell 0.31% to 13,160, the S&P500 traded 0.36% lower to 1,420.

Asian markets traded mostly lower in early session as investors were taking a cautious stance, to reverse early loss once Obama's re-election was cristal clear. Japan's Nikkei rose 0.07% to 8,981.30, Hong Kong's Hang Seng traded 0.30% higher to 22,009.42 , in mainland China, the Shanghai Composite  rose 0.19% to 2,110.03.

Currency wise the dollar fell versus the Euro and Yen as President Barack Obama's victory is seen as a continuation of the monetary stimulus policies that tend to weaken the currency as Romney had said he disagrees with the Federal Reserve measures to stimulate the economy and would replace Chairman Ben S. Bernanke at the end of his term in January 2014. The greenback fell 0.35% versus the Japanese Yen to 80.07 and the common currency rose 0.36% versus the dollar to 1.2861$.

Commodities such as Oil and Gold, reacted in an opposite way to the Obama re-election: the yellow metal rose 0.50% to 1,723.60$ an ounce, while Oil (WTI) fell 0.34% to 88.41$ a barrel.

In Europe, Greece is under the spotlight,as the 238 pages of austerity measures will be debated in the Parliament from 10 a.m Athens time with a roll-call vote expected after 8 p.m today. Bear in mind that the approval of the legislation is the first of the parliamentary votes required by Nov. 12 to unlock a 31 billion-euro portion of international aid. Greek Prime Minister Samaras has to cope with supporters' defection, last of which coming from Socialist Pasok, which provides Samaras with the votes he needs for his majority in Parliament.

From the Macroeconomic stand point of view German industrial production probably fell for a second month in September, decreasing 0.7 percent from the prior month, according to the median estimate of economists in a Bloomberg News survey. A separate report may show euro-area retail sales slid 0.1 percent in September, according to another poll.

The big question now is: how will the market react?

We would be on the sideline on the opening bell searching for hints, although the worst case scenario has been cleared out, therefore we think that Greece will be the game changer today. The trader who will come ahead of the game will be the one who will be able to assess correctly the volatility regime to plug into his/her today's game plan.

Have a great day.

Originally posted at www.77sigmatrading.com