"All eyes will be on the content and style of Trump's inauguration speech," Morgan Stanley's Hans Redeker wrote in a note. "The more 'Presidential' this speech comes across, the better the outcome for markets." And as BonY added, "If Trump ramps up the rhetoric the market will be concerned about building long dollar positions."
There is much we don’t know about how the Trump presidency will play out. But of one thing we can be fairly certain. President Trump is very likely to preside over the largest expansion of Federal budget deficits in our history.
Less than two days before Donald Trump is inaugurated as the 45th president of the United States, Fed chair Janet Yellen takes to the stage at the Commonwealth Club of San Francisco to explain (after all these years), what "the goals of monetary policy are... and how we pursue them." We can't wait to hear how increasing asset prices to untenable levels, depriving savers of income, and driving the largest wedge between rich and poor since the great depression have been part of the solution...
1) Long a variety of low-multiple, tax-paying, U.S. value stocks; 2) Long AAPL; 3) Long GM; 4) Short “bubble basket.” 5) Short oil frackers, 6) Short CAT (and other similar industrial cyclicals that have moved much higher post-election).
If an individual is “literally” burying cash in their backyard, then the discussion of the loss of purchasing power is appropriate. However, if cash is a “tactical” holding to avoid short-term destruction of capital, then the protection afforded outweighs the loss of purchasing power in the distant future.
In effect British Citizens will be punished twice for Brexit, now with much higher inflation, and down the line with a substantial recession when they actually start to experience the effects of leaving the European Union.
"The opinions of experts concerning the future are accorded great weight . . . but they’re still just opinions. While I take a dim view of forecasts, and especially of opinions presented as facts, I do believe there are such things as facts. Unfortunately, however, the concept of 'facts' is among the casualties of the increasingly partisan environment. Recently we have seen both the elevation in status of 'non-facts', as well as the tearing down of 'real facts'."
The weekly rail traffic report published by the Association of American Railroads provides a great snapshot of US economic activity almost in real (weekly) time. Last July we noted that we were starting to witness some signals of a trend change, now suggesting a softening. But much has happened since then, including a broadly unexpected change in the political direction of the US. Have those signals been reversed as a result?
If there is any economic assumption that goes unquestioned, it's the notion that profits will remain robust for the foreseeable future. This assumption ignores the tidal forces that are now flowing against profits.
"3% is basically the beginning of the end... as the business cycle ages, in 2019, 2020 when we could anticipate we might have another recession, that there will be another deflationary burst that will bring rates back down if we do get above 3%, but we haven't violated that trend yet."
The stock market has been on quite a roll in recent weeks, but signs of trouble continue to plague the real economy. Even though economic conditions appeared fairly stable throughout 2016, our long-term problems just continued to get even worse. So the truth is that we are more primed for a major crisis today than we have been at any point since the last recession.