Yesterday the board was green – leading many (including us) to speculate that the markets were in the midst of a “certainty rally,” driven by relief that the election would be decisive. This morning, however, we’re greeted by this:

(Disclaimer: past performance is not necessarily indicative of future results. Charts courtesy of Finviz.com.)

A “risk off” pullback following a big “risk on” day like yesterday isn’t really that unusual, but given the fact that these days framed the election, it’s impossible not to try to connect the two. On Twitter, Barry Ritholtz labeled it “Wall Street throwing a hissy fit.”, and many others are saying it’s the election of  the consumer protecting/bank hating (depending on your view) Elizabeth Warren to the Senate which has the market (the banks/Wall Street) panicked.

So is it Warren? Is today’s “risk off” move stemming from genuine surprise that Obama was re-elected? Has the reality of the fiscal cliff fight finally started to sink in? Or is it something else?

At the end of the day, managed futures will remain apolitical – not really caring what the reasons for such moves are, just that they are happening and that they show some persistence (we need weeks of such sell-offs to benefit managed futures). Whether this is the start of the market trouble which will lead investors to wish they had some/more/even more managed futures exposure is yet to be seen. Stay tuned…