unsustainable
market vibes
November 7 … )
“Our aim is to make tax collecting a declining industry.” Margret Thatcher, October 14, 1977. She had a sharp tongue! Two years later she was elected prime minister and served for 11 years.
The BOE cut .25 to 4.75% as expected. Initial claims at 8:30, JP at 14:30 EST.
A mixed bag of news this morning; nothing important exclusive of the elections. Many opine the blue/red war is just beginning. The house is still undecided with 39 seats yet to be certified according to posts on X but many say that Republicans will have a thin majority when all are done and dusted.
Eight members of the senate and 24 members of the house retired, not exactly a meaningful freshman class. Very marginal shifts in party dominance seem likely and the big issue for markets and the Powell Q&A today is federal debt driven by deficit spending driven by the uniparty. High on Trump’s list of pre-election promises is to cut spending and disempower waste via a new cabinet post for Elon Musk which will require the advice and consent of Senate committees.
In the meantime, we the people are entering a period of political warfare not unlike WW1 in 1916. I got a belly laugh when I heard Ms. Harris say, “[we will help him] and his team with their transition and that we will engage in a peaceful transfer of power.”
On to the markets
In the 1st chart today we have NDX futures in white with 30-year yields in blue. This positive correlation is unsustainable, in my opinion. Druckenmiller and Jones are on one side saying bonds are garbage and BlackRock and the banks are on the other saying pop the Champagne. Buffett eating popcorn in the bleachers.
I know yesterday’s irrational exuberance was delicious, but seeing ALL TBTF banks, once better known as Vampire Squids, rallying 10% in a single session should be somewhat terrifying. But…Lol. Memories are short in Ireland when railroad pay is rising… keep an eye on this one.
NDX futures are the only stock index yet to make new post-election highs which seems a little weird. However, yesterday’s vertical auction still seems unfilled. I suspect some profit taking before the Fed Statement but the issue today is not the .25 cut… it’s all about Powell.
There is no question about his tenure until May 15, 2026. It is entirely about which political camp he is in. The old blah blah about “we don’t do politics, we just do our job” was cool when Kamala was going to be the President. Trump has a hard mandate for change. Will Powell serve the people’s mandate? Or will he serve the global financial community. It’s time to show your cards. I do like him, but I think his money was on kamala.
Moving on to oil and other markets
