tag:blogger.com,1999:blog-1527840491496268397.post4816852987395412219..comments2024-03-08T11:20:30.095-07:00Comments on Credit Bubble Stocks: Repost: "Not Bullish On Bonds"Unknownnoreply@blogger.comBlogger1125tag:blogger.com,1999:blog-1527840491496268397.post-45513199282047552452016-11-12T07:30:35.732-07:002016-11-12T07:30:35.732-07:00Health care and education represent roughly 20% of...Health care and education represent roughly 20% of US GDP, which stands at $18.6T today. If Trump sneezes on either of those two sectors, which depend substantially on public spending, it will have a much larger economic effect than any amount of infrastructure-related fiscal stimulus.<br /><br />A Trump presidency will create winners and losers across different economic sectors. However, it doesn't necessarily follow that we'll end up with substantially higher inflation or interest rates (cf. Abenomics).<br /><br />Whereas the inflationary effects of a Trump administration are still hypothetical the real economic effects of a +50 bps increase in yields will be felt immediately in corporate profits (via <a href="https://fred.stlouisfed.org/series/TWEXB" rel="nofollow">TWEXB</a>) and real estate (via higher mortgage rates).<br /><br />Another factor that seems obvious but doesn't get much attention is that the US economy is due for a recession and an incoming president, like an incoming CEO, will prefer to recognize losses quickly so they can be attributed to the previous administration.<br /><br />So, I still think we see lower rates (but, maybe not new lows) before substantially higher rates.<br /><br />Having said that, nice call on rates :)<br /><br /><br />Nathanhttps://www.blogger.com/profile/14949090808825056899noreply@blogger.com