"Considering that the passage or non-passage of the health care legislation was a veritable coin toss circumstance we moved to cover those short derivatives positions early in the day and took to the sidelines. We remain there this morning."
European and Asian stocks were modestly in the green, with U.S. futures higher, before a critical procedural vote on a Republican health-care bill to repeal Obamacare, while Janet Yellen is set to speak in Washington at 8:45am.
Do not fear: there will be a “Trump Trade 2.0” at some point this year. Either valuations will retreat to the point where they reflect the reality of a legislatively-driven set of catalysts, or Washington will (in its own time) deliver on a pro-growth agenda as the market treads water. Just remember: Washington doesn’t work in New York minutes.
"This is the first time in a very, very long while we have actually gone short of equities, but it is our intention to become even shorter of them, hoping to sell a bounce that might develop intra-day." - Dennis Gartman
"The future is bimodal with volatility to be found between politics vs. policy... Either political bottlenecks clear and the stimulus gets approved and goes full force leading to higher growth potential with structural steepening of the curve, or political tensions effectively sabotage either its arrival or content (or both), and the curve initially bear flattens or even twists with rate shorts capitulation accelerating the rally of the back end."
"During the 2008 financial meltdown..There was a total disconnect between the paper price and physical demand. That’s now happening again, but in reverse. The paper price is rising, but physical demand is falling...This strikes me as total madness... There seems to be no fear in the market… no regard for sense or safety."
Here is the real problem with the gap between the Fed and government’s outlook versus reality: the more they push to convince markets of the economy’s strength, the more they set us up for a crisis.When Americans finally wake up and realize the Fed and U.S. government were bluffing all along, there will be no safety net to keep the economy from crashing down.