Last quote by David Woo
David Woo quotes
I don't believe that Trump is necessarily bad for business. The only thing we could say about a Trump victory is a lot more fiscal stimulus. If half the stuff he's talking about is true, the economy would take off. This would be the first time you get a fiscal stimulus when you're not in the middle of a recession. If we get a Trump clean sweep, this would be very bullish for the U.S. dollar but also very bearish for Treasurys.
If you think about the most crowded trades in the world right now, the most crowded trades are risk parity trades. The biggest positions are risk parity positions and it's done on a very leveraged basis.
You have a Democrat president, and a Republican controlled Congress which means you have gridlock in Washington. The market is pricing in this gridlock, meaning it's going to be that much of the burden of supporting the economy falls on the Fed.
Since July 5, the S&P has gone up about 4.5 percent. We're now at the midpoint mark of this 90 day rule. The last time the stock market was up this much at the halfway mark was when Ronald Reagan went on to defeat Walter Mondale in a landslide victory. The market is not only pricing a Hillary victory. The market is pricing in a landslide Hillary victory.
If the minutes are more likely to validate what Dudley said today, which means anything is possible … going into Jackson Hole, the market will have to be less complacent.
It does create the opportunity for the Fed to do what I think would be an opportunistic hike in September. I think the market is still underpricing the probability of an opportunistic hike.
I suspect the minutes are going to read more like Dudley than Williams. I think they're going to emphasize the data dependence. They could mention the easing of financial conditions.
We've had good data out of the U.S. and yet long-term rates can't go up. The market is therefore assuming the U.S. will not hike rates any time soon and the U.S. will continue to import easy policy from Europe and Japan. The market is very complacent on that point of view.