Election day update

I have built our portfolio for this market outcome (not political outcome). We have said all year that we expect rates and yields to rise and we experienced this after what we would expect to be one of the worst catalysts ever. There is an old saying, “If bad news can’t take you down, nothing can”. This isn’t the election outcome the market wanted, but the results speak for themselves, the market wants to go higher.

 

Not only is the market not going down, but it looks very strong to the upside backed by very good market fundamentals.

Source: Bloomberg

Look at these incredible moves in yields (yield change column), this looks like the bond market beginning to break down.

Source: Bloomberg

This is the world leading bond - US 10-year treasury, and the yield has moved up incredibly. This tells us money is leaving bonds to go elsewhere.

Source: Bloomberg

As money exits the bond market, we think the stock market is poised for a positive outcome.

We are perfectly positioned by owning financials and interest rate sensitives, and own no bond/income investments - this could potentially deliver us an excellent fourth quarter.

I haven’t been this bullish on the markets all year… but I’ll take my wins where I get them, and markets look to be giving us all a big win.

Chris, Rick, Steve

 

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