The Enigma Of Nicki Haley Dies Out And The Bulls Couldn’t Care Less: The Action For March 6, 2024
Recognizing the valiant but very late turn of Nicki Haley to fully repudiate Trump, the Times this morning offers the silly excuse of collective amnesia to explain Trump’s triumph over the GOP. In so doing they give short shrift to the more logical, simpler and obvious reason why many Republicans love him and why Democrats have a tough time beating him. Whether it’s 2016, 2020 or 2024 the Democrats find Trump a redoubtable antagonist because public services are the crux of Democratic policies and few Americans want to be in a position to want such services. And even sensible Republicans like the fact that Trump has nothing to say about public services, if they disdain everything else. Trump stands for autonomous individualism and most Americans would rather have that than rely on the government. The only public service programs that are popular are pure redistribution programs like Social Security and Medicare, which allow the ordinary person to fully escape the nasty macroeconomic consequences of such programs until health care issues catch up to them. Since public services have never been good the GOP has always counted on limited turnout for the other side, and Trump has gone beyond that playbook in openly campaigning for Democratic base votes with the logical, simple and obvious question of “What have you got to lose?” Unfortunately the nation has much to lose if Trump wins or causes chaos in November, and fortunately for the markets that’s a long ways off. For now the bulls are just happy that tax cuts are a distant possibility and so are cheering Trump’s victory,
The bulls have control for the moment as several indicators reveal confidence in corporate earnings and the macro environment. These include:
Liquidity Metrics: Measures of money flow across the globe are trending upwards lately, which helps equities.
S&P 500 Technicals: The top 40 in the S&P 500 look set to move the market higher.
Long-Term Treasury Rates: Long rates are falling and that will improve the attractiveness of equities while boosting the housing and auto industries to the benefit of economic growth.
BTP-Bund Spread Of Italian & German Bonds: Italian default risk and a corresponding crisis for the Euro are muted, which is critical for European stability and is good for global growth.
Emerging Market FOREX / $US: Nations like India, South Korea, the Philippines and Mexico are getting stronger against the dollar, and that’s good for global growth since many key imports are priced in $.
Tin Prices: Tin is broadly used across goods and industry and rising prices typically signal better growth prospects.
Based on the action yesterday and overnight there are no profound risks for the bulls to worry about today, except for the wide range of terrible geopolitical Issues. Absent an attack on an US ally the bulls have clear sailing to new highs until next week’s CPI report.
Yesterday I added a small additional position in the levered ETF UPRO, consequently my current positions include 3M (MMM), Pfizer (PFE), a slightly larger position in UPRO and a smaller position in SPXU, which nets out to a long position in equities.