As we explained first thing this morning, the market's correct reaction upon learning of the Trump presidency, was not to dump equities "limit down", but rather to buy every risk asset in sight, now that Trump is preparing to unleash the inflation monster, something the market realized later in the trading day, leading to the biggest one-day percentage move on record in bond yields, and stock market surge that has led to a 1,000+ rebound in the Dow Jones to all time highs.
However, not everyone was dumping. While the Dennis Gartmans of the world were liquidating their portfolios at lowest print of the year, warning of "fully engaged bear markets", Trump's close confidante and person speculated to be Trump's Treasury Secretary, Carl Icahn was waving it in.
As Bloomberg reports, while Donald Trump celebrated his surprise election win over Hillary Clinton and equity futures swooned in response, billionaire investor and Trump supporter Carl Icahn headed home to start trading. Icahn, left President-elect Trump’s victory party in the early hours of the morning to buy about $1 billion in U.S. equities, he said Wednesday in an interview with Erik Schatzker.
“I thought it was absurd that the market, the S&P was down 100 points on Trump getting elected,” Icahn said in a phone interview. “I tried to put a lot more to work, but I couldn’t put more than about a billion dollars to work,” he said.
Just as notable, we now know that Icahn, who said he’d taken off some hedging trades last night, after saying in August that he was more hedged than ever, is now openly bullish again. The billionaire said that the U.S. economy isn’t out of the woods yet, but he called Trump coming in “a positive, not a negative” for the country.
Speaking earlier in a telephone interview on CNBC, Icahn reiterated he has no interest in taking on the role of Treasury secretary in Trump’s administration. “I don’t think I’d be the right guy to fit into Washington, you know,” he said.
Icahn last year described Trump as the only campaigner speaking out on crucial business and economic concerns, and has maintained his endorsement since.
In September 2015, Icahn posted a video on his website criticizing “the dysfunction that is going on both in Washington and the board rooms of corporate America” and lambasted the U.S. Congress for failing to reform taxes or immigration.
And while Washginton will never be fixed, Icahn will contend himself with making a few hundred million opportunistically in one trade when the market acts out of emotion and not logic.
Incidentally, today's market move has nothing to do with the US economic prosects, and everything to do with the fear that a tidal wave of inflation is about to be unleashed as Trump pushes for fiscal stimulus and a massive debt-funded spending spree, something China also discovered today, leading to a record liquidation wave in US Treasuries, coupled with a record plunge in the Chinese Yuan.
As we explained earlier, once this open confrontation between China and the US escalated into more Treasury liquidation and all out trade (if not kinetic) war, the final result will be very painful, but for now at least, algos trading the stocks are happy.