Thursday, November 17, 2016

The Reaganesque Analogy Is Questionable
"Those promoting the current rally as a Reaganesque response to Trump’s desire for a massive fiscal stimulus should to be careful. This is not 1980 for the EQUITY MARKETS are on all-time highs, not suffering under the economic and market malaise of the high inflation and low productivity years of the 1970s .. If the stock markets are correct, then bond yields have to go higher, which will be another drag on stock values, especially with the huge amount of debt sitting on corporate balance sheets (debt that went to stock buybacks and dividends). The Reagan analogy is questionable .. The pundits discuss that Trump will be a protectionist as he owes debts to the Rust Belt voters who assured him the White House. But many of the Trump supporters are in the agricultural sector and as the last GDP number reflected, $10 billion dollars in soyabean sales is not hay. Farmers in the U.S. would be upset to lose access to the global food chain for if there is something the U.S. excels at it is growing grain and producing food .. The market is now convinced that the FED will raise rates at its December meeting but I would wait until the results of the Renzi referendum, and, more importantly, the November 28 B.I.S. meeting about capital needs and risk weightings. Also, will the FED be reticent to raise rates with the recent DOLLAR strength? I caution, do not just hear what you want to hear. Read and research and use technicals to find low levels of risk-taking that fundamentals lead you. These are going to be very volatile markets as we all struggle to understand the flotsam and jetsam of the global talking heads. For me the work load has just increased by geometric measures."
- Yra Harris
LINK HERE to the commentary

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