I know it's not time for a monthly asset class report, but I felt the need to review the markets in this crazy week or so after The Donald's re-election. Not only did Trump get reelected, but Jay Powell cut interest rates by 25 basis points again… And yields have increased again.

I know the stock markets are raging bulls right now, and that's something to be happy about. However, the underlying economy has real problems. Sooner or later, the stock market will catch up with the real economy. 

The UST 10Y Yield

Since Chairman Pow started to cut the Fed Funds rate, yields have done nothing but go up. That means the risk premium has increased. And that’s because the bond market knows something’s wrong.

From a low of 3.60% in September before his rate cuts, the UST 10-year yield has increased to 4.47% today. That wasn’t supposed to happen.

The Almighty Dollar

Of course, if yields increase, the corresponding currency's spot rate will also increase.

So, the dollar has been recrowned King Dollar, going from 100.16 to 106.70… in only a month and a half. Sure, the recent euro strengthening never made sense to me, as Europe’s economy is in the toilet. But I didn’t expect the dollar to recover so quickly on rate cuts. Again, that’s not supposed to happen. And I imagine it’s the last thing President-elect Trump would want to see.

Bonds

The corresponding increase in yields has also crushed bonds.

TLT has dumped from 101.64 to the current 89.80. Again, it’s only been over a month. Yesterday was a horrific day, and it portends lower lows from here. This isn’t shocking, thanks to the move in yields, but surely not what Powell wanted when he cut.

Stocks

It’s little wonder why people who invest in equities are always so sunny and optimistic. This chart is the Margot Robbie of charts:

The Nazzie and Russell 2000 charts look similar, so I won’t post them here. All you need to know is that this is a bull market, and you should participate. The only danger is that the chart will become hyperbolic and move too far away from its moving averages. Some stocks face that danger (PLTR comes to mind), but the overall index looks lovely.

Gold

Regrettably, gold has entered into what I hope is a short-term bear market, with its price well below the 50-day moving average. This is nearly the pattern followed in 2016 when Trump was elected for the first time.

I suspect it will find its footing between $2,480 and $2,400, though the descent could stop at any point. I’m still long the miners, with all their accompanying pain. One could say that I have a “shorn ring.” With that said, I still love gold’s long-term story, so I’ll stay positioned this way. The yellow metal needed a respite, and it's getting one. However, we'll see a swift recovery once The Donald’s fiscal plans are announced.

Oil

Unlike the SPX chart, this one fell out of the ugly tree… and hit every branch on the way down.

If Trump can get Israel and Iran to the bargaining table to make peace, we may see a $50 barrel. We’ve got lower highs and lower lows. The price is less than the 50-day MA, which is less than the 200-day MA. The only redeeming feature is that we may have found a bottom around this level. Still, there’s nothing to like about oil right now.

Bitcoin

Once again, Bitcoin went from a safe haven to a tech play in a flash.

HODLers celebrate their persistence while the rest of us wonder what’s going on. The only problem is that this is too big a move too soon. I wouldn’t be surprised to see a massive dislocation in a few months. Parabolic moves usually don’t end well.

Political Headwinds: Senate Confirmations

In the opening days of his second administration, Donald Trump has to hope his nominations get confirmed, even though the Republicans hold the Senate.

New Senate Majority Leader John Thune said, “The Senate has an advice and consent rule in the Constitution.” He added that Senate Republicans will do everything they can to quickly confirm Trump’s nominees.

Then Trump nominated Matt Gaetz as his choice for US Attorney General. We’ll see how the Senate feels about that in the early days of his administration.

Marco Rubio will surely get a pass from his soon-to-be former colleagues in the upper chamber. But Gaetz, along with the nominations of Tulsi Gabbard as Director of Central Intelligence, Pete Hegseth as Secretary of Defense, and Kristi Noem as Director of Homeland Security will be tougher confirmation tests.

We haven’t even got to Robert F. Kennedy, Jr., yet. Trump may lose that fight if he nominates him to head the Department of Health and Human Services.

All this political stuff can throw a wrench into the markets. And Trump’s tariff regime? Good friend and colleague Bob Byrne brought that up in yesterday’s editorial meeting. No one is currently pricing that into the markets, which may lead to a major correction early next year.

Wrap Up

I hope that catches you up on the politics and markets of today’s wild world.

Keep an eye out for big moves. This market can turn at any second, but it hasn’t just yet. There's a lot more to come.