What A Trump Victory Really Means For The Market
9 November 2016
, by Tyler Durden (Zero Hedge)http://www.zerohedge.com/news/2016-11-09/what-trump-victory-really-means-marketExcerpt:
Just like with Brexit, the so-called Wall Street experts scrambled to paint a picture of doom and gloom, warning traders, and markets, that the end of the world is imminent should Trump win, and that stocks could drop by 5%, 10% or more should Donald Trump get elected president. And again, just like in the case of Brexit, they convinced the algos and the momentum chasing traders. Briefly. Because after futures hit the 5% down limit shortly after the market realized it was dead wrong about the presidential election, they have since soared nearly 80 points of the overnight lows and are well above the Friday, pre-Comey close, level.
Simple: as we have repeatedly said, a Trump victory, coupled with lower taxes, a spike in infrastructure spending, and a surge in debt is precisely what the economy - and a normalized market, one not manipulated daily by central banks - wanted and needed, as it not only will prompt yields to rise, but it will assure even more QE in the near future as foreign buyers of US debt disappear (assuming Trump does not do away with the Fed entirely, which for a man running a real estate empire, he won't do as he ultimately needs lower rates).
As Trump said overnight, in a far less combative speech than pundits had expected, "We're going to rebuild our infrastructure...we're going to put millions of people to work as we rebuild." A tax-cutting and big-budget extravaganza means Treasuries will have a hard time staying higher, it also means a steepener yield curve, just the thing banks need and explains the jump in bank stocks this morning.
It also means much more fiscal stimulus, as various pundits discovered overnight.