Submitted by Alasdair Macleod via GoldMoney.com,
The Trump shock produced some unexpected market reactions, partly explained by investors buying into a risk-on argument,equities over bonds and buying dollars by selling other currencies and gold.
Ever since the US adopted a “One China” policy after the 1972 Nixon-Mao meetings, followed by President Carter formally recognizing Beijing as the sole government of China in 1978 leading to the closure of the US embassy in Taipei one year later and cutting off relations with Taiwan, when it comes to US-China diplomacy Washington has maintained a steady posture when it comes to Taiwan: non-recognition.
While paper gold traders can't seem to dump the precious metal fast enough, physical gold demand is soaring around the world. India retail premiums are spiking (amid demonetization), local China premiums soar to a 3-year-high (as capital controls loom), and coin sales from the US Mint have risen for the 4th straight month, accelerating post-election to the highest since July 2015 since Trump's victory at the election.
Did Jeff Gundlach do it again? Shortly after the DoubleLine manager told Reuters yesterday afternoon that the Trump rally is ending, that "stocks have peaked" and that it is "too late to buy the Trump trade", US stocks tumbled to session lows, and have continued to drop overnight, with S&P futures down 0.3%, alongside sliding Asian and European markets; oil and the dollar are also down with the only asset class catching a bid are 10Y TSYs, whose yields are lower at 2.43% after reaching an 18 month high of 2.492% overnight ahead of today's nonfarm payrolls report.
It is said that history has a sense of irony. The latest US election is not an exception.
Consider the following…
1. Donald Trump campaigned aggressively on trade… particularly his opposing of the fact that the US gets taken advantage of by foreign nations via bad trade deals.
2. Trump wins the Presidency on November 8, 2016.
3. US trade gets royally screwed in the currency markets.