The Trump Trade Unravels

What is real here ?

Every whore on Wall Street is hooked into the Trump Trade. I would define the trade as a trade directly or indirectly supported by the US taxpayer. It could be zombie companies supported by government supported High Yield bonds, it could be overnight traders pushing up stock futures every night, it could be interest rates suppressed that fuel speculation in stocks.

At any rate, I see the following at the moment;

  1. High Yield (high risk) corporate bond prices have stretched the envelope to the limit. As such I see their yields going up vs the 10 and 20 year government bond, putting pressure on the zombie companies.
  2. Gold is under pressure as a source of liquidity as stock market leverage unwinds.
  3. S&P and Nasdaq stocks are at the edge of their envelope vs 10 and 20 year bond prices.
  4. The dollar should gain on stocks and gold.

Update on trades:

  1. The Biden Strong Dollar trade that was outlined a few days ago, long dollar and bonds, short gold and stocks is working, primarily due to gold and the dollar in this initial stage.
  2. The Fed Macro Influence trade, started on August 7th, basically short everything, bonds, gold, commodities, and stocks continues to work especially after a big test of it yesterday.
  3. Stocks were sold yesterday as the Special Macro Stock trade triggered with a trade over 3609 on the S&P, actually a big present at 3640 area on the opening, and now we are looking for a close under 3279 to add more units on the monthly confirmation. Bounces to the 3600 area over the next couple of days will be used to add units also.

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