The World Is About To Witness A Breathtaking Once In A Century Event
On the heels of a historic election and chaos in global markets, the world is about to witness a breathtaking once in a century event.
Expect Stunning Changes
Stephen Leeb: “Donald Trump’s victory sparked some of the most tumultuous action in the markets in decades – by some measures far more extreme than in 2008….
There is little doubt the market is signaling major changes ahead. These will almost certainly be more than just a change in market leadership, from big-cap high-tech stocks to metal miners, etc. They will be more than a reversal in the market’s overall direction, say from bull to bear. Rather the market is telling us to expect stunning changes in the entire nature of the world’s economy. And all investors should be listening.
Trump Win Initially Shocks Global Markets
Let’s review this past historic week. On Tuesday night and early Wednesday morning as a Trump victory became ever clearer, stock futures dropped further and further into the red and at their low were down 5 percent. Gold rallied and at its high it was up about 5 percent.
Then it seemed to dawn on almost all investors at the same moment that whatever you thought about Trump’s temperament, his populist message had carried the day. His economic policies would be hell bent on growth. From climate change to financial regulation, all barriers to growth would be knocked down. And given his real estate background, leverage wouldn’t scare him one bit.
The thought of major infrastructure projects, tax cuts, less regulation, and a constrained Fed led to a 180-degree turn. Stocks were in, bonds and deflation out. Steady growth was out, leveraged cyclical growth was in. This was a trend that had been trying to take hold since mid-year, but the Trump victory sealed the deal big time.
Take a look at the chart below.
Year Chart Of Caterpillar, FaceBook, Amazon, Rio Tinto
Four major companies diverged dramatically post-election. Facebook and Amazon sank against the rising market, while Rio, one of the world’s largest commodity producers, and Caterpillar, which as the largest earth-moving company is highly leveraged to infrastructure and mining, soared. Most commodities followed suit. Copper’s weekly gain was one of the largest ever. And from its low in late October, when Trump started to gain in the polls, copper has climbed 15 percent.