“You can't go back and change the beginning but you can start where you are and change the ending.”
— C.S. Lewis
One of these rare moments where what happened yesterday doesn’t seem to matter an aweful lot anymore … RESET
As a Trump win now seems a done deal and a Red Sweep becoming increasingly likely with Fox News just announcing that Pennsylvania also went to the Republicans, markets are currently playing that scenario exactly according to that book.
Equity futures in the US sharply higher, led by small cap stocks (Russell 2000):
Which makes intuitive sense with relation to the republicans business friendliness, but much is much less coherent with the sharply higher bond yields we are observing. The Tens are at their highest since summer, well, well off their pre-FOMC cut September lows:
Higher yields = higher borrowing cost for usually higher indebted small cap stocks. One side has to give, yes or yes.
The greenback, traded usually 24/5 and highly liquid, is rallying like there’s no tomorrow. Here’s the popular EUR/USD cross, inverted for psychological effect:
Liked that “effect”? Wait for the Bitcoin chart then:
So, we stocks up, yields up and Dollar up so far. Anything down?
HA! China, of course! Hong Kong’s Hang Seng index, where the “Trump is not so good for China”-Trade is probably more expressed than on Chinese Mainland stocks, is down 2.5% as I type:
And, Gold, together with other commodities (copper, oil, etc) is also down, which is likely much more an expression of US Dollar strength than true commodity weakness:
I will warp up here, with a reminder that today is not a day to be a (investing) hero, but rather a day to lean back and watch it all unfold. Short-term gyrations, misjudgements and speculations offer opportunity, but come at a sometimes hefty price. Stay humble, stay nimble, stay tuned …
