In the weeks since Donad Trump was elected president, US financial stocks (and energy companies) have soared with all eyes on Dow 20k. However, across the world's capital markets, investors have lost a combined $1.2 trillion in debt and equity values, as the bond losses have outweighed stock gains dramatically (especially post-Fed). The question is - what happens next?
The drop in global debt and equity values in Q4 2016 is very reminiscent of the drop into 2015's Fed rate hike... which did not end well...
But, the last time that global stocks and global bonds decoupled so aggressively was following the end of QE3... here's what happened next...
But it's probably different this time, right? China is fine (oh wait, failed auctions and liquidity crisis), Europe is fine (oh wait, Italian banks are collapsing), and the US economy is great (oh wait, automakers are shuttering plants due to credit-created excess inventory).