Key quotes from this interview with “Mr. X”: “It is important to think of what’s happening in markets in two timeframes, and then try to gauge when there is a phase shift from the near-term narrative to the big picture reality.” “If there is a successful vaccine, the “buy industrials/cyclicals & commodities while selling bonds and gold” is the right trade.  On the other hand, if the second lockdown continues to worsen, “sell everything except

Key quotes from this interview with “Mr. X”: “It is important to think of what’s happening in markets in two timeframes, and then try to gauge when there is a phase shift from the near-term narrative to the big picture reality.” “If there is a successful vaccine, the “buy industrials/cyclicals & commodities while selling bonds and gold” is the right trade.  On the other hand, if the second lockdown continues to worsen, “sell everything except

Why we think the Fed may be terrified of a successful COVID vaccine (page 2) “One of Biden’s new COVID task force doctors floats the idea of a new 4-6 week lockdown” (page 4) New daily COVID cases surge past prior two waves – Fed balance sheet size to follow in 3…2…1…? (page 5) “President-elect Joe Biden signals that he’s open to canceling student debt” (page 6) “Wilbur Ross says deficit will approach $3.5 trillion

While it makes perfect sense to us that bond yields surged on the vaccine news (driving gold and BTC down sharply [along with some other “duration proxies” like tech stocks]), we think it is incredibly important that investors understand the context of this back-up in yields:  There has been no other cycle since 1946 with US debt/GDP as high as it is today, with interest rates as low as they are today, and with the

“McConnell cites ‘possibility’ next COVID aid package will help state and local governments” (page 2) Biden: “I will use the Defense Production Act to turn the tide on this epidemic.” (page 5) “Ready with the battle plan.” (page 8) “Bank of England expected to launch £100 billion of QE as lockdown 2.0 begins” (page 9) Fixing this chart requires a gold bubble (page 10) IMF Chief Economist: “The world is in a global liquidity trap;

Selling stocks on election night 2016 proved to be wrong; buying USTs on expectation of a Biden presidency and a split Congress may prove similarly wrong now. Consensus appears to be some version of “a Biden presidency with a Republican Senate means”: More COVID shutdowns; Minimal stimulus; Higher taxes; More regulation. However, policy options available to Biden and Congress are likely FAR fewer than most investors realize due to… Record high total equity market cap/GDP;