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The market’s up. My friends are down. Most of the Fall leaves are still up, and gorgeous.

First, the New York Post’s take on last night:

I’m having a contest to find the only person in the U.S. who stayed awake for that miserable performance last night.

If you did, send me an email and tell me what you learned.

Investment implications of last night’s debate

I don’t think there were any. But here’s an intelligent comment this morning from Nina Hughes, Portfolio Manager, at a boutique hedge fund called Axiomada:

The interesting thing about this election is how much focus there is on the presidential election and not on the potential for Democrats to win the Senate AND the presidency.  Our operating assumption has been that Biden wins the election, the Republicans hold the Senate, and the Democrats hold the House.  We see this as a Goldilocks scenario where monetary policy remains easy, taxes remain unchanged, and many of the uncertainties around corporate spending intentions, trade, and pandemic related policy get resolved.

But our operating assumption is increasingly not the most likely outcome.  A recent poll from 538 shows a 61% chance of Democrats winning the Senate.  This is the scenario that we believe creates market risk due to the potential for meaningful legislative and policy change.  The first 100 days in this scenario are most likely a targeted move towards wealth redistribution, regulation, and expanded public sector jobs efforts.  We see none of this as good for markets in the short run even if it proves to be the right thing for the US as a whole.

In the less likely event of a status quo outcome where Trump wins the election and Republicans maintain the Senate, this is likely viewed as a short term positive for markets as a whole but in the tech sector, the impact is likely to be more negative as the industry is more global and is dependent on China as a customer, supplier, and manufacturer for many physical goods.

There is also the hard to assess outcome of a protracted and contested election.  While this case seems very scary on the surface, we don’t view this as significantly worse than what might happen during the standard lame duck window between November and January.

So to recap, we don’t see tangible alpha opportunities directly related to the election and we plan to mitigate exposures around the most commonly traded tech themes around the event.  In the aftermath, we are hopeful that there are distortions and overreactions that create higher certainty opportunities for us into 2021.

Meantime, the market seems to love last night’s debate and our tech stocks this morning (as I write this) are up strongly.

Thomas Friedman of the New York Times had a stronger reaction to last night

Here’s what he wrote this morning

Trump Sent a Warning. Let’s Take It Seriously.
Our democracy is in terrible danger — more than since the Civil War, more than after Pearl Harbor, more than during the Cuban missile crisis.

President Trump has made it unmistakably clear in recent weeks — and even more crystal clear at the Tuesday (last night’s) debate — that there are only two choices before voters on Nov. 3 — and electing Joe Biden is not one of them.

The president has told us in innumerable ways that either he will be re-elected or he will delegitimize the vote by claiming that all mail-in ballots — a time-honored tradition that has ushered Republicans and Democrats into office and has been used by Trump himself — are invalid.

Trump’s motives could not be more transparent. If he does not win the Electoral College, he’ll muddy the results so that the outcome can be decided only by the Supreme Court or the House of Representatives (where each state delegation gets one vote). Trump has advantages in both right now, which he has boasted about for the past week.

I can’t say this any more clearly: Our democracy is in terrible danger — more danger than it has been since the Civil War, more danger than after Pearl Harbor, more danger than during the Cuban missile crisis and more danger than during Watergate.

I began my career as a foreign correspondent covering Lebanon’s second civil war, and it left a huge impact on me. I saw what happens in a country when everything becomes politics, when a critical mass of politicians put party before country, when responsible people, or seemingly responsible people, think that they can bend or break the rules — and go all the way — and that the system won’t break.

But when extremists go all the way, and moderates just go away, the system can break. And it will break. I saw it happen.

I would like to think that such a thing could not happen in America. I’d like to think that … but I am very, very worried.

I worry because Facebook and Twitter have become giant engines for destroying the two pillars of our democracy — truth and trust. Yes, these social networks have given voice to the voiceless. That is a good thing and it can really enhance transparency. But they have also become huge, unedited cesspools of conspiracy theories that are circulated and believed by a shocking — and growing — number of people.

These social networks are destroying our nation’s cognitive immunity — its ability to sort truth from falsehood.

Without shared facts on which to make decisions, there can be no solutions to our biggest challenges. And without a modicum of trust that both sides want to preserve and enhance the common good, it is impossible to accomplish anything big.

“Politics needs a reference point outside of politics,’’ argues the Hebrew University religious philosopher Moshe Halbertal. “It needs values, it needs facts and it needs leaders who respect that there is a sacred domain of decisions that will never be used to promote political gain, only the common good.’’

Public trust is eroded, added Halbertal, when people feel that this notion of the common good doesn’t exist because everything has become politics. That describes the United States today. The institutions we have relied upon to be outside the game of politics so as to adjudicate what is right and true — scientists, certain news media, the courts — have become so ensnared by politics that fewer and fewer of them are universally trusted to define and pursue the common good. Even mask-wearing has become partisan.

You cannot sustain a healthy democracy under such conditions.

And that is why the only choice in this election is Joe Biden. The Democrats are not blameless when it comes to playing politics, but there is no equivalence to the Republicans. The Democratic Party sorted through all the choices, and, led by older Black men and women in South Carolina, rejected the Democratic socialist candidate and said they wanted a moderate unifier named Joe Biden.

The Republicans — who in the past voted for Ronald Reagan and George H.W. Bush, sane conservatives who could be counted upon to uphold the common good — have done no such equivalent thing. They have fallen in line lock step behind a man who is the most dishonest, dangerous, meanspirited, divisive and corrupt person to ever occupy the Oval Office. And they know it. Four more years of Trump’s divide and rule will destroy our institutions and rip the country apart.

To me, the only hope for America is to elect Biden and split the G.O.P. between the Trumpists and whatever is left of the moderate Republicans, and then hope that a big center-left and small center-right can agree on enough things to propel the country forward, heal the divide and act together for the common good.

Admittedly, Biden did not particularly shine in tonight’s debate. Alas, I have never seen him shine in any debate. But I have no doubt that the people, values and integrity he would bring into government would be of a quality that the nation deserves.

If Trump’s monstrous performance left you feeling that you want four more years of his presidency — that he will respect the outcome of the election if it goes against him, that he will reunite the country, that he will do the presidency proud and surround himself with people of the quality that the country deserves — then you and I were watching different debates.

To get back a semblance of unity and sanity, Biden has to win. And that is why I have only one answer to every question now: Vote for Biden — do it by mail early if you must, but if you can, please, put on a mask and do it in person. If enough of us do that, Biden can win outright with the votes cast on Election Day, instead of waiting for all the mail-in ballots to be counted, thereby giving time for Trump and Fox News to muddy the outcome.

So help register someone to vote for Joe Biden. Phone bank for Joe Biden. Talk to your neighbor about Joe Biden. Volunteer for Joe Biden. Drive someone to the polls to vote for Joe Biden.

Do it as if your country’s democracy depends on it, because it does.

My view on the next 3½ months to January 20, 2021

First, the economy is recovering. (I talked about that recently. Click here.) Many many stocks will do well — with the exception of those that got shot down by the virus, like airlines, cruise ships, retail, and theme parks  and Disney which just fired everyone and their uncle.

Second, I can’t predict which particular stocks we own (there’s a list on the blog) will do really well from one day to another. Some days Apple and Amazon — my two biggest holdings — go up. Some days they go down. When they go down. I usually buy a few more. I just bought some Texas Instruments (TXN). I should have owned them before.

Third, I’m not selling anything, since I feel confident in all the stocks you and I own.

We played our 200th consecutive tennis game this morning

That’s Mark Johnson on the left and me on the right. Mark let me win the second set today. Mark says he’s going to write my name in for President when he votes. He teaches me tennis, I, in turn, teach him the value of flattery, which he says I’m intelligent enough to teach him. He pretends to listen in order to make me feel good.

Tennis is good because you get “free” non-boring exercise — unlike running, which is boring.

There’s one key to tennis: Get to the ball fast. Then you have time to whack it where your opponent isn’t.

Commentary on life today

This morning’s foliage in Columbia County

First, looking into Punsit Valley, on the way to Chatham.

This is a hill in Spencertown.

This is Chatham opposite the Sonoco plastics factory (which is really ugly)

This along Route 203 going into Chatham.

All photos done with my Apple iPhone 11 Pro Max. It’s not the best camera. The $6,000 DSLR ones are much better. But given my iPhone 11 also does email, texting and phoning and fits into my pocket, I’ll take it for now.

See you tomorrow, when I play my 201st tennis game with Mark. — Harry Newton