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Trump wins, fearmongers lose

Cliinton and Pence Victory

We all know Wall Street desperately wanted Hillary to be President and tried using scare tactics saying the market would plunge 10+% in the event of a Trump victory.  And futures are down, but no where near the 10% they promised.  The thinly veiled scare tactics Wall Street deploys are now all too transparent.  Of course, we saw the same shenanigans prior to the BREXIT vote where "all hell would break loose" if England exited the Euro.  And within 4 trading days, the market was back to even.  

Will the stock market go down 10+% at some point?  I believe so but I believed that even if Hillary were elected.  The issues facing the stock market, in my opinion, have little to do with who occupies the White House or the European Union.  It has everything to do with occupies the Federal Reserve Chairman post.

When the FED is out of bullets, the bond market will tank and take all "risk-on" assets priced relative to bonds with it.  And as long as the USD remains strong and there is demand for US Treasuries while inflation is tepid, the FED has plenty of ammunition.  But a hit to the USD, which is taking place this morning, or a hit to the Treasury market, which is also taking place this morning, could hamstring the FED and that could spell T-R-O-U-B-L-E for USD denominated securities.   The USD, which I have commented on in several other posts which you can read the most recent here, was well on its way to a correction before the upset last night.  And the Treasury market has been on the decline since the summertime, back when another Clinton presidency was a lead-pipe cynch.