Ad Hoc Commentary – First Brexit, Next Trump. France and Germany are next in line.
In our last post, we mentioned that:
“…the majority seems to believe a Trump presidency is bad for SPX. This means that the SPX probable 10%-20% sell-off on a Trump presidency is going to be the buy signal for yours truly…”
“…In any case, all three upcoming elections [American, French, and German] are concerning because there is a high likelihood of Brexit-like outcomes. Brexit is probably the first meaningful outcome of the growing “unrest” at the ballot-boxes, and there are likely many more to come in the coming months…”
“…The main problem is that the establishment probably knows very well that Trump’s rhetoric is resonating well with the masses. As a consequence there is an increasing likelihood that the world will need to prepare for a Trump presidency…”
https://tradehaven.net/ad-hoc-commentary-is-us-russia-going-to-war-in-syria/
Firstly, Trump indeed won, confirming our earlier belief that:
“…the higher the S&P500 rise, the more likely that we will see a Trump White House come 2017…”
Next, yours truly is amazed by how quickly S&P500 recovered by the reaction sell-off overnight. We are about flat on the day now – after seeing the futures selling off 100 points overnight. We are likely on the verge of a very bumpy journey ahead. Yours truly believe the long-term trend upwards is intact, as we said in late June, we repeat it today:
“…a Trump presidency coupled with US dollar strength will cause the S&P500 to jump, doubling or even quadrupling. This is mainly because the Donald has the willingness to default…”
https://tradehaven.net/ad-hoc-commentary-brexit-is-the-beginning-of-the-disintegration-of-the-eu/
Lastly, this is just the beginning. France should brace for May 2017 presidential elections, and Germany should be ready for surprises in the Oct 2017 federal elections.
Trump vs Clinton is the battle of many ideologies, but chief among them is:
- non-war (Trump) and immediate war (Clinton)
- debt default (Trump) and taxation (Clinton).
For now, non-war and debt default had won the battle. These are not without consequences. A truce in Syria. An olive branch from Russia. Would these stop the cancer of the Islamic State? A default on Asian central banks. A repudiation of welfare to grey-hair Americans. Would these make the world a safer place? Would the unrest at the ballot boxes be ignored? Would they assassinate?
In the immediate term, the prospect of non-war will mean less capital flight into America. On the other hand, the threat of debt-default will stoke the great rotation from debt into equity. It’s tough to be a fund manager these days.
Good luck in the markets.