Business

In his recent TV appearance, last week David Stockman suggested that President Trump would be better suited to spend some time actually addressing economic issues instead of the administration's travel ban for immigrants from Middle Eastern countries, which Stockman called "a giant misfire." Employing the 1992 Clinton Campaign motto of "it's the economy, stupid," Stockman noted "Trump was elected because flyover America is hurting economically.

Reflation trade bitches...between Yellen tomorrow (hawkish), China end of reverse repo drought, Trump "phenomenal" taxes, and expectations for a hot CPI on Wednesday - everything is awesomely inflationary.

Oklahoma claims it owns the wind, caves in to oil and gas lobby and seeks to set the nation’s highest tax on wind power. Oklahoma’s governor plans to tax the renewable energy industry out of existence while phasing out tax credits for the wind industry. Just when you thought it couldn’t get more insane. Just when you thought it couldn’t get more insane – Wyoming Bill Would Outlaw #renewableenergy via @EcoWatch https://t.co/7V1Dg3MohU — Robert F.

Add these two charts to your list of things to totally ignore...

Peak Credit Complacency: US High-Yield Corporate Bond risk is once again below the 400bps level - which in the past has not held long...

h/t @Pierpont_Morgan

And Peak Equty Valuations: The Shiller CAPE is now in the top 3.9% of all occurrences since 1881 - probably a good time to Buy the record highs?

h/t @DonDraperClone

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As noted this morning, there are three drivers to today's action: i) last week's Trump promise of "phenomenal" tax cuts, ii) tomorrow's Janet Yellen testimony before Congress in which she is expected to sound hawkish, and iii) the overnight end of China's reverse repo drought which injected CNY100 billion in liquidity in the banking system after a 6 week pause. It is these three that prompted a return with a vengeance to the "Trump Trade" euphoria, which as RBC's Charlie McElliggott writes in his intraday note, is why the "reflation trade is back with a vengeance."