Viva La Revolution
The following is commentary that originally appeared at Treasure Chests for the benefit of subscribers on Wednesday, November 9, 2016.
From The Wizard of Oz - "Ding Dong - The Wicked Witch is dead" - figuratively speaking of course. Hillary and the corrupt Clinton machine are finished - and with any luck heading for The Big House.
So will The Donald taking the White House solve all of America's problems? Answer: Hell no - however it needed to happen because if the Clintons had control of the 'Free World' for another four-years, there wouldn't have been much freedom remaining by 2020 - if we were still here at all. (i.e. think nuclear exchange with Russia.)
Apparently Hillary took the popular vote due to the shear numbers in California and New York, however you can't feel bad about this considering the votes her machine stole just about everywhere else. If the true popular vote had been counted, Trump would have been way ahead. So ironically, justice is served for once - one for the good guys.
Now, The Donald has the gargantuan job of attempting to undo decades of damage self-serving oligarchs and bureaucrats have imposed on America, and the world. The thing to understand about what this means for the political economy of the world, is globalism, is about to get the kick in the head it deserves, and the decentralization process is about to kick into high gear. As you may know, I have seen this coming for some time - and now here we are.
So congratulations America - it's a second revolution for you - the 'soft revolution'.
Dow futures were down 800 at one point overnight, but the price managers have shown up to cut those losses in half, and then some. Once the cash markets open at 9:30 they may not be able to control the selling, we will see, because as you know a great amount of leverage exists in the markets that will need to come out at some point. You want to watch not only the VIX as per our comments yesterday, but also the TNX. If it breaks higher and threatens 2% you should get increasingly defensive.
And this applies to precious metals as well unfortunately, at least initially, and especially the shares. If the cost of money is going up for real, they will take a hit along with the rest of the interest sensitive sectors (even financials eventually), don't kid yourself. On the flip side of the equation however, they will also be the first to recover, and recover the most as the markets begin to sniff out the accelerating currency debasement the Fed will be forced into under such conditions. So don't worry about core positions you may have, they should be fine.
The European markets, and precious metals, are giving back their gains now, so anything is possible as the price managers panic. The question is what happens after this panic. We will obviously know more by next week. If the S&P 500 (SPX) finishes the week above 2100, more sideways/grinding higher price action is possible. Watch the put / call ratios (see here) to gauge probabilities in this regard. If speculators get bullish, as measured by falling ratios (except VXX), then significant losses are possible.
Fast forward a few days and this has not materialized of course, and indications are the shear force of the 'Trump pump' into next year may preclude a meaningful reversal in stocks for some time yet, however don't kid yourself folks - it's fantasy to think The Donald can fix all that ails America - we're are not in Kansas anymore.
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