NOV 8, 2024
We are excited to announce…
MacroCapture by MI2 Partners, our first solo product for Individual Investors, launches Monday. We are bringing all the best aspects of macro research together. More Julian Brigden and his insights into macro markets, but also more of the entire MI2 Partners team and the analysis that has made the firm the leading macro research firm for the past 13 years. And using the most successful macro research product ever as a base for the new one. For more information and to subscribe CLICK HERE.
All purchases made on or before Friday 11/15 will receive bonus content.
“The easy money has been made. Don’t expect these types of gains to continue”
In a stroke of luck (from the perspective of clarity) it turns out concerns about the possibility of a long, protracted election fight was wide of the mark. The Presidential election was called quickly (though at the time of writing, control of the House is still up in the air.) But as Trump trots to the “winner’s circle”, markets are still busy correcting commentators regarding just who the winners and losers of Trump v2.0 will be.
Markets are displaying a broad sense of euphoria. Both stocks and rates were dramatically higher on the outcome: stocks to all-time highs, though, as this Barron’s article warns, “don’t expect these types of gains to continue”. (Barron’s is not alone in making this point, but it ain’t the first time that this particularly unhelpful point has been made in the course of this bull market). On a more granular level, the article noted that the Republican Senate majority “means Trump’s fiscal policies have a good chance of passing” and the moves in the bond market second that idea. The dollar strengthened significantly following the announcement (which is likely part of why precious metals took a beating) but such pairs as USDMXN have roundtripped their election night moves.
On the policy side, how exactly will the Trump tariffs be implemented and what are the likely macro effects? Will they, as “Economists… tend to agree”, “have the effect of raising prices on everyday goods”? Will it affect allies across the world as much as feared? And just how will increased US oil production work in practice, and, should it come to fruition, will it possibly offset the tariffs-induced increase in the cost of goods? Even the great and good Jerome Powell admitted uncertainty, saying it is “too early to model” Trump’s potential economic policies. “We don’t know what the policies are.” Admittedly, one of the questions which we are most interested in is what Fed “independence” means in practical terms.
Powell and friends face quite a task in demonstrating their resolve to respond if inflation returns with a vengeance (though Powell did note that the “plan is to not have stagflation”, and it’s good to have a plan!). The yield curve seems to think that Trump v2.0 means more fiscal stimulus AND that the Fed will have the spine to hold off on cuts in the face of a potential reacceleration in inflation. We wish them the best of luck, but these types of compound assumption remind us of Twain’s famous warning… “It ain’t what you don’t know that gets you in trouble. It’s what you know for sure that just ain’t so.”
