For a brief but tense period, two weeks ago the US found itself without a single aircraft carrier in any area of the globe. The absence of a deployed U.S. Navy aircraft carrier, long seen as a symbol of American power projection, was noteworthy because according to Fox, "it is believed to be the first time since World War II that at least one U.S. aircraft carrier has not been deployed."
In late December, we explained why of all Trump economic proposals , the "border tax adjustment", while most controversial, could have the biggest impact on US assets.
European shares rose as Fiat rebounded on hopes concerns about parallel to Volkswagen are overblown, Asian stocks were little as Chinese shares fell to the lowest level of 2017 after poor export data, and U.S. equity-index futures rose ahead of a deluge of bank earnings. The dollar is headed for a weekly loss and gold trades at the highest price in almost two months.
"After a Jan/Feb wobble, we believe stocks & commodities will have one last 10% meltup in H1," explains BofA's Michael Hartnett in his latest note, but, he adds, by the end of 2017 we will see a "meltdown." BofA awaits the endgame of the so-called "Icarus Trade" amid unambiguous signs of bullish investor Positioning, bullish Profit expectations & hawkish Policy from Fed/ECB, as well as outperformance from laggard risk assets; before calling for the Big Short.
The Icarus Trade
While Rex Tillerson's confirmation hearing as Trump's Secretary of State was for the most part uneventful, several hours into his back and forth with the Senate Foreign Relations Committee, Tillerson compared China’s actions to those of Russia in Crimea, saying a failure to respond had allowed it to “keep pushing the envelope” in the South China Sea.