Today’s up market anticipates an Obama victory (so tomorrow we’ll collapse)

Factory orders fell 2.5% in September from August levels, the Commerce Department reported this AM. The credit freeze began in mid September, so a full month’s figure might be 5%… or 10%? A 5% decline in one month is catastrophic.

Nonetheless, the market is up sharply. This is most likely reflects the fact that investors and traders, after months of fretting, are anticipating a clean Obama victory. That’s what is already reflected by gamblers, who will, if McCain wins, give you $650 for every $100 you bet on Obama.

But if the market is sharply higher in anticipation of an Obama victory, the bad news is that the market will likely sell off sharply tomorrow. (Remember always: buy the rumor, sell the fact.)

Tomorrow, after a brief spurt higher, the market will go down doubly hard as it finally digests today’s bleak factory order news and the fact that we now have to sweat out three months with a lame duck president.

Sadly, Fox news, Drudge and other general economic ignoramuses will blaim Obama for that sell-off.

Update 11/05/08: Yep, Drudge took the bait.