The biggest overriding factor in this Trump rally is not reflation, it's the Trump tax cut. Because if it's one thing ALL RepubliCons can agree upon it's cutting taxes for corporations and the ultra-wealthy, while fucking over future generations. It never once occurs to them that the plan could backfire...
"...while they are not identical, both approaches would provide massive tax cuts for individuals and businesses – especially for the wealthiest Americans -- and contribute substantially to the long-term debt absent real offsetting cuts and savings."
As indicated, this tax cut will boost corporate profit (stocks) while imploding the deficit. Which is why stocks went vertical up and Treasury bonds went vertical down.
The Dow / TLT ratio is at the most extreme level in the past 15 years:
And hence, tax cut anticipation fuelled the rally in Financials:
Now we know why the Russell 2000 made a new all time high amid a massive spike in futures. Because small cap stocks will disproportionately benefit from a tax cut.
In other words, this tax cut is already "priced in", because markets don't wait until inauguration day:
R2K commitment of traders (red) with R2K:
Unfortunately, the money to fund this tax cut via the U.S. deficit has already come out of the rest of the World, which can no longer afford reserve-currency profligacy...
Global yields with GDP:
China yields and stocks:
EM currency and credit
"Say bye bye to exceptional corruption"
High yield stocks
Utilities and other high dividend payers:
Risk Parity funds
"fiscal stimulus following the U.S. election — particularly if Donald Trump is elected — poses a huge threat to risk parity portfolios."
And the entire Rest of the World
For example, a typical Vancouver homeower with a high loan-to-value ratio mortgage will now pay an extra $1,000/month in interest costs to fund Trump's tax cut for Exxon.
Generation Corruption is ALL IN
But as long as Dow gamblers are ALL IN on their corruption scheme, it's ALL GOOD, because that's where they're going to be buried. For good.