Categories: Base Metals / Energy / General Market Commentary / Precious Metals
Topics: General Base Metals / General Energy / General Market Commentary / General Precious Metals

Gerardo Del Real: Has the Dow Peaked? No Way.

Has the Dow Peaked? No Way.

by Gerardo Del Real 

The same people who have been calling for a dollar crash for over half a decade are now yelling from the rooftops that the Dow — and all major U.S. stock indices — are due for a crash of epic proportions.

Many of the ivory tower academics confuse the economy with the stock market, ignoring the lack of correlation.

I’ve written several times that the bond market is where the largest pools of capital are and that understanding the rotation out of bonds here in the U.S., and in Japan and Europe, would provide the catalysts for higher stock prices, a higher dollar, and eventually much higher precious metals prices.

A recent CNBC article by Michael Santoli stated that Bank of America Merrill Lynch calculated that the first week following Donald Trump's election saw the largest rush into equity funds in two years, the biggest withdrawals from fixed-income funds since the early 2013 "taper tantrum" in bonds, and the widest spread between stock and bond flows on record.

The result has been record-high closes in the major U.S. stock indices, the dollar at 13-year highs and, not so coincidentally, treasuries selling off at a pace that left benchmark yields on track to post their steepest two-week increase in 13 years.

The simple explanation is that the rally is due to a perception that a Donald Trump presidency will translate into less regulation, infrastructure spending, and tax cuts that will have an inflationary effect.

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