Is Donald Trump actually now the US President?
I told you fourth waves are usually very tricky to trade because they usually exhibit heightened volatility – and so we are seeing in the Dow since the 1 March all-time high was put in.
The previous third wave was a real joy to trade earlier this year because the rally was practically straight up with few setbacks. That’s why I love trading third waves! As I pointed out, in February there were twelve straight up days just prior to the top – a record. All a bull had to do was go to sleep in front of his/her screen and clock up the daily profits accruing.
But of course, that sleep-inducing style produced a record level of complacency with the inevitable consequences – eight straight down days in early March. And just when a record number of bulls at maximum bullish confidence had been attracted to the market, the market turned – for no apparent reason.
Here is a fascinating chart. It shows the Consumer Confidence Expectation survey of US households asking the question: “Do you think stock prices will be higher in a year or not?”
chart courtesy www.elliottwave.com
Even in the most bullish phases since 1980, the ratio never exceeded the 47% level. But look how the index has performed in the last month or so – it has suddenly rocketed up from the low 30s to match the previous record set in 2000 at 47%, just prior to the dotcom bust when the S&P 500 P/E ratio hit the 30 – plus mark.
And that sudden explosion in bullish confidence occurred right as the stock markets were making their tops a month or so ago! How’s that for a vivid demonstration of the truth in the old adage that the public always buys high (and sells low).
Can we all accept that Trump really is the US President?
With Trump’s decision to attack Syria amid widespread agreement of almost all except the Russians (and Syria, obviously), he has suddenly propelled himself up in the approval rankings. But how so very different it was on election night, November 8th! His approval ratings were the lowest of any in-coming President.
Like most, I have been following the progress of the Great Disruptor keenly since then. He was the most unlikely candidate (to put it mildly) and I was anxious to see if he could break the back of the Washington establishment and ‘drain the swamp’ as he promised. After all, he is not a politician (unlike his predecessors) and he made some bold – and to some, crazy – claims and promises during the campaign.
Many have called his pronouncements ‘fake news’ and ‘alternate truths’. But recent revelations have shown that he was not far off the mark in at least two instances – his much-derided claims that Sweden has a jihadist problem, and the CIA hacking of Trump Tower communications.
Both claims were widely regarded as total fantasy in the MSM in order to rally his yokel redneck followers in the hills of Appalachia. But far from fantasy, evidence is now emerging to back up these claims.
What is fascinating is that the MSM and the liberal elite are following along the classic lines of Kubler-Ross’ Five Stages of Grief:
Denial, Anger, Bargaining, Depression, Acceptance
The Denial Stage Remember back on election night of November 8th when TV shots of Hillary’s campaign HQ were filled with (mostly young) supporters breaking down in floods of tears? And on the street, hordes of metropolitan liberals were likewise in total shock as they staggered around like zombies in total disbelief of the result.
The Anger Stage And within days, huge protest rallies were organised in cities around the world (!) which the MSM extensively covered. There were pathetic rallies in support of Trump, but these received little MSM attention. The anger on the faces of the anti-Trump demonstrators said it all.
The Bargaining Stage As the realisation of the result gradually dawned, the mass public protests died down as anger gave way to thoughts of how can they make the best of having Mr Trump as their President.
The Depression Stage Some do not go through this phase but for those that do, all hope is lost and they see no way out. My guess is that the died-in-the-wool liberal metropolitan citizens would go through this stage. After all, they have a very firmly held world view and with Trump as POTUS, they have a President that threatens to overturn what they believe should happen – and destroy their quasi-religious beliefs.
The Acceptance Stage Just yesterday, Congress has come out with its full support of Mr Trump over his Syria strike, as have many overseas leaders. And that is not all. The headlines today are of a terror attack in Stockholm and it seems the man was a jihadist. So Mr Trump was right after all about Sweden having a jihadist problem – a view widely derided previously in the anti-Trump MSM (in the Denial Stage). Sweden has been widely viewed as an inclusive and peaceful nation – until now.
So has everyone now accepted the election result? A prominent social commentator has just published “Could it be that President Trump’s foreign policy is not fake news?” Even the MSM are coming round (they are among the last)!
And it has now been admitted that the CIA did ‘spy’ on Trump Tower (as they do on almost everyone on earth). No fake news there. A certain Susan Rice, a national security advisor under Obama, is implicated.
The bottom line? Taking a contrarian view and as I suspected, Trump has been telling it ‘like it is’ all along more often that not (after all, he is no politician and has no built-in capacity for lying) and I would like to see his approval ratings next week. Just two days ago, the Independent (a title that should be investigated for false and misleading advertising!) gleefully proclaimed his ratings hit a new low at 34%. I wonder if they will publish the data when his approval rises?
But sadly, it seems all a President has to do to gain approval is invade another country – as have others in the past. I believe his domestic low tax/high spend agenda will be much more fraught as the US is heading for a brick wall in the shape of the budget ceiling this summer. That will impact Treasury yields in a dramatic fashion and I am preparing for huge moves in T-Bonds a little later.
