Is the Knee Jerk real ?

China and the US markets are loaded up. No doubt the biggest factor is the US FED whose message has been – you can ignore risk, we have your back, price multiples are not important.

Looking around the world at the two dominant economies, US and Chinese, and their stock markets it is fascinating that both countries have had their relative strength highs earlier in the year, China on July 6, and the US on September 2. What is even more fascinating is that the US election market reaction was even more interesting in China (MCHI and FXI markets) as they jumped to new highs for the year, while the US did not. Also, relative strength shows the rallies since November 3 do not have relative strength support.

Enough said for the moment, we are watching closely as a lot could happen before the Electoral College meets and Trump actually puts his stuff in the moving truck.

The Biden Dollar Trade

The long dollar and bonds, short gold, and stocks trade put on yesterday has a slight profit today. One needs to keep in mind this is another of our Apex trades, that is looking for a turn, the trend is still in the other direction. We believe the US Dollar will move back into a dominant position , especially if as we expect the special Senate elections go blue in January.

And one other thing..

The election shows the US population has taken the juice and likes it. The fact that the Republicans picked up seats in the House is telling. It deems the people are more concerned about their pocket books than COVID, after all most of the people dying are outside the 30 to 55 age group that dominates the economy. Of course the juice we are talking about is the dominance of the FED easy money in peoples lives. As to the election response, the Republican message was that it was their policies that pushed the stock market higher this year, being quiet about the real reason.