Bond

Weekend Reading: Trumponomics

“The problem for Trump is that we no longer reside in the 80’s where a large group of ‘baby boomers’ were entering the workforce and driving a massive wave of innovation and productivity changes.  Today, we are on the wrong side of the demographic trends combined with falling productivity and labor force growth.”

Everything You Need To Know About The Italian Referendum (& Should Be Afraid To Ask)

While the post-Trump euphoria in US stocks has been the perfect distraction from the ugly realities elsewhere, this weekend's Italian Referendum could well be the biggest 'revolt' yet, topping Brexit and Trump. Should Italy vote "no", as polls forecast, PM Renzi may quit, leaving the Italian bank recapitalization would then be in jeopardy and, as Bloomberg's Mark Cranfield warns "we could be looking at a Greece-like market reaction on steroids."

"A Watershed Month" - November Sees Greatest "Asset Rotation" Since 2013

The final November fund flow numbers are in, and as BofA's Michael Hartnett puts it, November was a "watershed month" for fund flows with the largest 5-week bond outflows in 3.5 years (Chart 1), largest 3-week precious metals outflows in 3.5 years (Chart 3) and largest 4-week equity inflows in 2 years.

Gross Echoes Gundlach, Says Trump Rally Is Misguided: "Move To Cash"

On the heels of Jeff Gundlach's "there's going to be a buyer's remorse period" warnings yesterday, the other 'bond king' has raised similar fears that the Trump rally is overdone (as are the prospects for growth behind it). Putting aside the book-talking as their bond portfolios suffer, Gross echoes Gundlach's "Trump's not the wizard of oz" comments, noting that the next president faces serious structural headwinds and warns investors "should move to cash," as any fiscal stimulus gains will be temporary at best.

Frontrunning: December 2

  • Futures fall ahead of jobs report (Reuters)
  • Obama to Block Second Chinese Deal on Security Concerns (BBG)
  • Trump Exults in Victory and Mocks Critics at Ohio Rally (BBG)
  • China's Central Bank Is Facing a Major New Headache (BBG)
  • Trump considering Goldman Sachs COO Cohn for energy secretary (Reuters)

JPMorgan Tells Investors: Ignore Mainstream Media

"Geopolitical developments should be gauged from... non-traditional data sources (such as big data sentiment indicators, independent media outlets, etc.) given the failure of many traditional data sources to anticipate geopolitical developments this year."

Visualizing The "Tectonic Shift" In The Markets' Narrative

"...we're at a phase in this UST / developed sovereign bond trade where previously acceptable conditioning (‘buy dips’; ‘get long-er duration because it just keeps working’; ‘never-ending bond inflows will always pause selloffs’ etc) are all being reset in real-time, and this behavioral shift is painful."

3 Things: Exuberance, Small Caps, & 6% Realities

"...there is a long way to go between President-elect taking office, drafting bills and getting them passed. There is even a further period of time before any actions actually passed by the Trump administration actually create perceivable effects within the broader economy. In the meantime, there are many concerns, from a technical perspective, that must be recognized within the current market environment."