The Four Year Election Campaign
In short we are watching the blow-up of a four year election campaign, one based on the premise that the stock market, not the economy or people is important. Everything that has been done, tax cuts for the wealthy, FED pressure to reduce interest rates (killing savers), and full blown support of high risk corporate bonds to save the over-leveraged, are focused on one thing, four more years. To stop this the 66 % just need to vote, will they?
As to the macro trade, (short assets, long financials) the story is unchanged. Since the key June 5th date, all parts of the trade basket are up. The trade is working because the long side of the basket is up much more. Gold is up 7.2%, 20 yr bonds are up 7.0 %, Commodities(CRB) are up 1.0%, and the S&P is up 0.4 %. This puts Long / Short basket up 3.0% as of today. Its a no-growth story.
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