New New Deal Rally

I was dreamin' when I wrote this
Forgive me if I go astray
But when I woke up this morning
Coulda sworn it was Judgment Day
--Prince

Would be remiss if we didn't recount the tremendous amount of market movement since election night. When the tables began to turn in favor of Trump on Tuesday nite, futures markets immediately fell out of bed. The Dow was down nearly 1000 pts and many markets were 'limit down' at about -5%.

However, when Trump spoke after the election had been called about getting the economy going again via government 'investments,' markets began trimming their losses. By the time the opening bell rang yesterday morning, equities were in the green and didn't look back. The Dow lifted 300 pts and finished with in spitting distance of all time highs.

What happened? Beyond the maniacal behavior of traders seeing themselves caught on the wrong side of 'common wisdom' about the election, a primary factor in the move higher is hope that Trump will drive the investment in infrastructure projects to stimulate the economy. Banks, retail, healthcare, heavy equipment, et al. Many stocks in these sectors are closing in on 10% gains since Tuesday's close. A New New Deal rally

As we know, the prospect of more stimulus peps up addicted markets.

Unfortunately bonds didn't play along. As stocks partied higher yesterday, Treasuries were crushed. Ten year yields are now north of 2%--a place they haven't been in nearly a year.

Why the selling? Government stimulus projects need to be paid for. Bond markets are beginning to discount how much Treasury debt will be required to fund these projects. Interest rates are being remarked to reflect higher borrowing costs.

If govvies continue to get splattered, then it is only a matter of time before bond yields stop the New New Deal stock rally in its tracks.

positions in gold, SPX