Fast Money

Listened to CNBC Fast Money yesterday.  It is a good indicator of what Wall Street fast money is thinking.  Trump is good for banks, industrials, and defense sector.  Bad for utilities, telecoms, and bond proxies.  The paper napkin 5 minute analysts are having a field day with the potential scenarios of a Trump presidency.  It was clear that there was still some apprehension, because after all, many of them were scared to death last week, so it is impossible for them to turn on a dime and go max bearish to max bullish.  But let's just borrow renowned commodity king Dennis Gartman's phrase: they are pleasantly long.

As long as they are not maximum bullish, there is still fuel for the market to go higher.  But the change in market opinion was much more rapid than I anticipated.  Perhaps it is the proliferation of hedge funds and their herding behavior that leads to such quick moves, and then total stagnation and flat markets once we reach the pre-destined level.  It is unlike what you saw in the 1990s and 2000s.  Since 2009, there have been very few pullbacks when the market is in an uptrend.  Only after you reach a point of stagnation does the market finally pullback.  That also is usually when the intermediate term trend is over.  

I do believe equities will go higher in the coming months, but I will probably play it small or just sit out the rally.  I don't have a lot of conviction when betting on a blowoff move, even if I do think it is likely to happen.

By the way, with the way bonds are trading, I don't think you will get much reward for the risk that you take going long bonds for the rest of the year.  With the huge jump in yields over the last 2 days, it is clear there is a lot of money stuck in a painful spot holding long duration bonds.  The uncertainty of a Trump stimulus package is a huge cloud hanging over the bond market.  The prudent choice is to wait for the liquidators to sell to stronger hands.  After you get a bit more fear in bond investors and higher yields, maybe 2.40% 10 year yields, then it may be time to do some buying for the long term.