Essentially you have a guy who will run a fiscal stimulus fest for 4 years with a mandate to help corporate america and its profitability. To me, it just doesnt make sense to skeptical of US stocks. Sure, there could be long-term problems (from the higher dificits) but -The problem might never happen (The increase in the deficit could be modest, Paul Ryan is still around after all) -Even if it does happen, the market might ignore it, everybody knows entitlement will blow up the deficit massively, yet, that doesnt seem to matter to market prices -In the mean time, a stock skeptic is fighting a administration that will be working hard to create short-term catalysts armed with a only a fimsly long-term thesis based on deficits. Its just dumb to do that imo, short-termism still rules the world. The recent all-time highs in US indices seem to suggest that the market is starting to see these things
Essentially Trump will take over as the squeezer in-chief job from the Fed. The Fed made every short/skeptic job miserable for years, and they all pretended not to be doing it, yet the market saw through it. Trump now can do it shameslessly, people will have a lot easier time seeing it (and judging by quick election collapse recovery and quick all-time highs, they are seeing it without much problem). Essentially there is a Trump put now, that put involves corporate america. There might be hicups along the way, specially if the bond sell-off gets out of hand but I believe they will be buying opportunities. SPX is likely to be worth 2300-2400 over the next year and potentially more if negative growth policies don't show up. Of course, I'm assuming there isn't a surprise recession/shock
Druckenmiller says he is short US bonds, bunds, the EUR and JPY against the USD. These are interesting trades to consider
From Valuewalk Stanley Druckenmiller: Was short the mkt on a Clinton win And was going to short more if rallied on her win based on the quagmire of no options left after 8 year experiment of low rates. But went long on Trump win on lower taxes and deregulation Sold gold when gold up 35$ on election night. Thesis changed. World changed when Trump elected.. Multi year. Re Trump: Not a Trump fan but Pence and Ryan close Fan of Ryan See cuts in individual taxes and Corp Nondeductible for construction expense How does the Senate react to special interests If 1/2 get through its huge Larry Lindsey sees 6% GDP in ’19 And 10 yr should correlate with that He’s made good calls Stan doesn’t think it gets all the way there Sees Interest rates- rising Short U.S 10’s and 30 yr Short European bonds And Gilts Should be at 3% 10 yr Monetary policy is stealing demand from future If 3% ten year could see 10% correction in mkt but could correct way sooner in anticipation Like Japan on correction Euro could go to 82 Stupid policy in Japan (tighten on deflation, ease on strength) Euro zone makes no sense Each country dependent on different issues Within 10 years EU will break up Japan Debt to GDP is crazy Resolution? Need to monetize May have started May be good for their mkt Paul Tudor thinks Trump may cause Japan may have to tighten.. Stan says open to that idea. Ryan/ Pence could be ready with plan by July Senate approval is wild card as well as Trump. **Very optimistic rigged low volatility period has ended. Better for hedge funds **Both long short and macro
FNMA and FMCC starting to look like another hit for Ackman. I'm long both through PSH and with an external stake. Stock liked UST sec appointment, gapping now. Pro business adm and Goldman guy likely means good outcomes to shareholders
If the best case scenario plays out, he might make more there than what he lost on VRX. But dont let the bashers know that, it will ruin their day
The valuation of FNMA FMCC if shareholders are allow to own 20% of the company are around $20 bucks a share each. Of course, this might get settled for less than 20%. But still, it will be a good win for longs
FNMA FMCC is an important stock to watch for swing/position trades. If the bulls are right, the amount of wealth creation for longs there will be gigantic. I got my long-term positions but I'm planning to take certain bets for periods of time where the stock is likely to reprice higher. Right now it could be it, this is something I got to watch intraday and make an assesement based on price action, news, etc. Not really something I can be quick enough to mention in this journal, but its definetly something to keep on radar. This could be on its way to $6-$8 within months
If the government pulls the AIG playbook, then they will sell their shares to the market overtime. They will raise hundreds of billions of dollars. That's pretty much the money that they need to fund the infrastructure spending without blowing out the deficit. So they got the ideology that help shareholders (rule of law, private ownership), as well as the fiscal incentive to do it