Gold mine production is peaking globally and this is “bullish for gold” according to a slowly emerging group in the gold industry. It is great to see the reality of peak gold production slowly be acknowledged in the mainstream as it is an important fundamental factor in the market which has been continuously ignored.
Prior to the election, investors didn’t believe there was much operating leverage available in corporate America. Slow revenue growth, slow inflation, slow wage growth, slow earnings growth. That was the recipe for next year. Now, expectations for better economic growth have markets scrambling to find companies with the operating leverage (read high fixed costs and high incremental margins) to show outsized earnings growth as a result.
"The VIX index – the famed “fear gauge” – no longer has any explanatory power for leverage... The mantle of the barometer of risk appetite and leverage has slipped from the VIX, and has passed to the dollar."
The sharp rise in yields following the Trump victory inflicted a big loss in the value of the global bond universe with the dollar value of the universe of tradable bonds globally losing $1.2 trillion over the past week, while at the same, the value of global equities increased by $0.8 trillion; however the real fireworks were behind the scenes, where the fund in- and outflows within equity groups were truly unprecedented.
After a brief few hours of rallying overnight as early indications tilted towards Clinton, the moment Florida was called for Trump, China's offshore Yuan started to crash. Just hours later it has dropped 5 big figures to a record lows of over 6.82/$ despite China's officials preferring him.
OPEC warned in newly released report that oil prices might not rise above $60 per barrel until the end of the decade, in an acknowledgement that an array of bearish forces will conspire to keep a lid on any price rally.
There seems to be a growing assumption that the elites have finally figured out how to turn a capitalist system into a perpetual motion machine by having central banks buy up all financial assets. This is classic “peak of the cycle” thinking, and the more widespread it becomes the closer the system is to breaking down.
Deutsche Bank has advised its sales and trading team to immediately report to their trading desks should Trump wins Pennsylvania and Michigan. So if Trump be is reported to be leading and/or winning the two key battleground states at 8pm, expect all volatility hell to break loose.