Stocks Soar, Bonds Burst

Thoughts on the chaos in markets over the past couple of days by economic guru, Steven Menking at the Amateur Society!

The Amateur Society

After US equities went limit down overnight when the election was called for Trump, we’ve seen an absolutely face melting rally to the upside. These all time highs (or thereabouts depending on which index you’re looking at) are brought to you by the Plunge Protection Team, the Federal Reserve, the Exchange Stabilization Fund, and high frequency traders. My initial hunch this morning was that this is for the purpose of giving institutions an opportunity to get short after being caught on the wrong end of the election. Perhaps it’s simply a momentum algorithm driven spasm. Even more unlikely is the hypothesis that the interpretation of the fundamentals has changed and that now everyone and their mother’s computer program believe that the Trump presidency implies unfettered bullishness.

In any case, these massive swings are an indication of potential future price dislocations. When we see huge wicks like the one on the…

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