Let us head over to the comex:

Early morning gold/silver trading/Goldcore

Gold Surges 5% After America Votes Trump President

• Gold surged over 5% – from $1,270/oz to $1,335/oz prior to profit taking
• Gold jumped to its highest level in six weeks on early reports that Trump had won the race to the White House; Largest gains since Brexit shock
• For the next few days, we can expect to follow the “Brexit playbook”
• “We are looking at very real prospects that the Fed would defer that rate hike into 2017…”

Gold has surged more than 3% to over $1,300/oz today after the shock election of Donald J. Trump as the next President of the United States of America. At one stage gold was 5% higher having risen from $1,270/oz to $1,335/oz as the dollar and stocks globally saw sharp falls.

The world isn’t sure what to make of it, other than concluding that perhaps Brexit wasn’t a mistake at all. Instead, it was a sign of the deep seated resentment and anger with the political and economic status quo foisted on the working and middle classes by western governments in thrall to corporation and banks.

Brexit and what will no doubt be seen as Brexit II, have both sent shockwaves through the US economy this year. Back in January had you asked for odds of both the UK leaving the EU, or the presenter of the Apprentice winning the US election, you probably would have been laughed out of the shop.

But that attitude has caused much turmoil. We are not seeing as big a shock in the markets as we saw in Brexit, however there is a flight to safe havens. Early this morning investors were piling into gold, bitcoin, Japanese yen and government bonds as yet again investors, bookmakers and the media were wrong-footed and completely wrong with their definitive predictions of a Clinton win.

The gold price jumped to its highest level in six weeks on early reports that Trump had won the race to the White House. It marks gold’s biggest daily gain (so far today) since Brexit when the price rose as much as 8% and closed on June 24, up 4.8%on the day.

At present the jump in gold lags that seen over Brexit, but the Trump victory is likely the beginning of uncertainty and panic setting in across global markets given the massive political and economic uncertainty that has been created.

The surprise of Brexit and Trump means we have gone from pricing in the known to pricing in the unknown.

Brexit II and the politics of anger?

“For the next few days, we can expect to follow the “Brexit playbook”.A big sell-off of US assets is a given, as is a subsequent bounce. Emerging markets will be a particular victim due to their dependence on trade. They appeared to be at the beginning of a renaissance; that is now in question. Markets tend to overshoot, and this will produce some buying opportunities and bargains.” wrote John Authers in the FT.

But will the markets begin to recover as they did with Brexit, in the aftermath of the result and the calm before it becomes a reality in January? Therefore, what is happening today or for the rest of the month, does it matter? Surely the zeitgeist, the forces that brought in Brexit and Trump will continue to make an impact.

“With so many years of low and non-inclusive growth, we are witnessing the politics of anger at play, a phenomenon that polls have underestimated on both sides of the Atlantic. Both the establishment and expert opinion are being challenged in a big way,” Mohamed El-Erian, chief economic adviser to Allianz, told the FT.

With this in mind we should be considering the medium-long term future, rather than the fall-out from a Trump win today, and Brexit win this year. The reality of the US economy is unlikely to improve – in has been in this poor state for many years.

When the financial crisis emerged in 2008 it was expected that a political crisis would soon follow. In many ways we have been lucky that it has taken this long to appear.

Central bankers, financial institutions and the ‘one percent’ have been blamed for eight years, now the electorate has had enough and are looking for a shake-up in the status quo that has for so long failed to serve them. Feeling disenfranchised from government is “now a permanent statement of affairs in the United states” Robert Shapiro told Bloomberg this morning.
Very few saw it coming.

“Brexit showed that polls are imperfect, and we are in an era of populism which is playing havoc with normal assumptions,” said Matt Peron, head of equities at Northern Trust, told the FT.

This also shows that Brexit was not a mistake as so many Remainers want the world to believe. Now the US, along with the UK has voted against aspects of globalisation. Economic insecurity felt by the individuals who were voting was a common thread across both the US and those in the UK during Brexit.

Soon they may well not be the only two in the Western world to do so.

We have key events coming up in Italy, France, the Netherlands and Germany. This may be good for the US markets and the dollar in the short-term, as markets may well end up quickly refocusing their attention on the Eurozone and the challenges facing the euro.

How will gold react now?

As we have written about extensively in the last few days, gold will be the one of the few winners in this election. In the immediate future, this is still all about uncertainties, no one knows how Trump will play the President role. We have a President-elect who has never served in public-office before, this adds a huge amount to the amount of unease that is not only being felt in the United States but across America.

John Authers wrote this morning, “The certainties that had reassured the investors and financiers since the era of Thatcher and Reagan and that are now in question include a global commitment to free trade, independent central banks, a financialised version of capitalism, and relatively limited social safety nets.”

This morning we saw gold’s rally pull back slightly during Trump’s victory speech, one that showed a man who is in fact able to be calm, measured and suggest an inclusive government that works for all.

“Gold’s near-term moves will be determined by how much the president-elect tones down his strident rhetoric [if at all] and therefore whether this reassures or spooks the markets,” Jon Butler, precious metals strategist at Mitsubishi stated.

However, he made a series of promises to a volatile electorate, it is how these will play out, against a backdrop of geopolitical mayhem, that will really impact the gold price.

“Although the Trump campaign’s more radical political objectives would be unlikely to make it through Congress, the push-back against free trade and more protectionist agenda would represent a further drag on global growth,” ICBC/Standard Bank strategist Tom Kendall said earlier in the week.

The yield on the US 10-year government bond initially dropped this morning before recovering as is the more policy-sensitive 2 year note. A rate hike in December might be seen as a little early now, and this is hitting the US Dollar. Prior to the election result, the probability of the Fed Hike was around 80-90%, now commentators are pointing to a 50% likelihood of a rate rise.

“If the dust settles then the Fed may not find it necessary to renege on their inclination to hike rates sooner than later. But if market uncertainty doesn’t abate then we are looking at very real prospects that the Fed would defer that rate hike into 2017,” Vishnu Varathan, senior economist at Mizuho Bank, told Reuters.

A delay in raising rates, by the US Federal Reserve, will provide yet more upward momentum for the gold and silver price.

Where now for Trump?

Perhaps strangely, we turn to Paul Krugman and his analysis of what this might mean for America and the rest of the world, “Under any circumstances, putting an irresponsible, ignorant man who takes his advice from all the wrong people in charge of the nation with the world’s most important economy would be very bad news. What makes it especially bad right now, however, is the fundamentally fragile state much of the world is still in, eight years after the great financial crisis….what if something bad happens and the economy needs a boost? The Fed and its counterparts abroad basically have very little room for further rate cuts, and therefore very little ability to respond to adverse events.

“Now comes the mother of all adverse effects — and what it brings with it is a regime that will be ignorant of economic policy and hostile to any effort to make it work. Effective fiscal support for the Fed? Not a chance. In fact, you can bet that the Fed will lose its independence, and be bullied by cranks.

“So we are very probably looking at a global recession, with no end in sight. I suppose we could get lucky somehow. But on economics, as on everything else, a terrible thing has just happened.”

Editors Note:It is worth remembering that the likes of Krugman were alarmist and wrong in stating that Brexit would mean a collapse of the UK economy. His warnings now regarding Trump are exaggerated, highly partisan and based on ideology rather than facts.

The money printing, faux QE “recovery” that Krugman has lauded is on its last legs and Krugman and his ilk know it. Indeed, it has merely, as we all know, “kicked the can down the road” and created an even more unbalanced, vulnerable debt laden world.

Gold in US Dollars (1 Week)

The currency debasing, monetary policies of recent years have failed the working and middle classes of the world and are set to fail. Krugman and the central bank loving uber-Keynesian, interventionist economists look set to try and blame Trump for the coming U.S. recession and indeed global recession or depression.

Macroeconomic, systemic, geopolitical and monetary risks remain heightened. One such risk is the fact that the U.S. is in effect insolvent with a near $20 trillion nominal national debt and over $100 trillion in unfunded liabilities.

These risks were largely ignored by the Presidential candidates and the media in the superficial ‘Punch and Judy’ election that we have all been subjected to. Blaming Trump for these risks is simplistic, silly and plain dangerous.

Gold will protect investors in the coming months and years from these risks and remains an important diversification for those seeking to protect and grow wealth in the next four years.

Gold and Silver Bullion – News and Commentary

Gold has biggest rally since Brexit as Trump wins White House race (CNBC.com)

Gold sees biggest rally since Brexit as as investors flee to safe havens (Telegraph.co.uk)

Gold has biggest rally since Brexit as Trump wins (Reuters.com)

Gold prices soar in Asia on tight finish to U.S. presidential race (Investing.com)

Hillary Calls Trump and Concedes Defeat (CNN.com)

Gold Surges Over $50 And Tops $1335 Before Profit Taking (Goldcore.com)

Live* Trump fears roil markets: Mexican peso hits life-low, stocks and dollar sink as safe-haven yen and euro gain (Telegraph.co.uk)

The Presidential Election Won’t Stop the MOTHER OF ALL DEFLATIONS (GoldSeek.com)

Nassim Taleb Explains Who Just Got Buried (ZeroHedge.com)

What will Trump’s election mean for the monetary metals? (Gata.org)

Gold Prices (LBMA AM)

09 Nov: USD 1,304.55, GBP 1,050.42 & EUR 1,176.84 per ounce
08 Nov: USD 1,284.00, GBP 1,034.26 & EUR 1,162.02 per ounce
07 Nov: USD 1,286.80, GBP 1,036.13 & EUR 1,162.50 per ounce
04 Nov: USD 1,301.70, GBP 1,042.79 & EUR 1,172.57 per ounce
03 Nov: USD 1,293.00, GBP 1,040.61 & EUR 1,165.90 per ounce
02 Nov: USD 1,295.85, GBP 1,056.51 & EUR 1,169.76 per ounce
01 Nov: USD 1,284.40, GBP 1,048.58 & EUR 1,167.52 per ounce

Silver Prices (LBMA)

09 Nov: USD 18.81, GBP 15.12 & EUR 16.96 per ounce
08 Nov: USD 18.26, GBP 14.72 & EUR 16.54 per ounce
07 Nov: USD 18.22, GBP 14.67 & EUR 16.47 per ounce
04 Nov: USD 18.30, GBP 14.65 & EUR 16.48 per ounce
03 Nov: USD 18.07, GBP 14.50 & EUR 16.32 per ounce
02 Nov: USD 18.54, GBP 15.05 & EUR 16.70 per ounce
01 Nov: USD 18.24, GBP 14.91 & EUR 16.54 per ounce

Recent Market Updates

– An uncertain election outcome looks good for gold
– Ignore past elections, this one’s too uncertain
– Gold may be the only winner in US elections
– The London Gold Market – ripe for take-over by China?
– Diwali, Gold and India – Is Love Affair Over?
– Silver Krugerrands By South African Mint Coming Soon – Massive Clearance Sale on Gold Krugerrands
– Trump “Will Probably Win” and Gold “May Rise $100” Overnight – Rickards
– World Is Out of Weapons
– Gold Is The “Kardashian of Commodities” – Herbert & Keiser Interview Skoyles
– Value of Gold – Unlike Paper Currency Gold Maintained Value Throughout Ages
– Fed Risks Lehman Crisis As US Recession Storm Gathers
– Silver Eagle Demand ‘Returned with a Vengeance’
– Cashless Society – War On Cash to Benefit Gold?

:

Stunned Global Markets Wake Up To President Trump

We apologize this morning if there is a few extra grammatical errors, or if stuff simply does not make sense (even more than usual): the Zero Hedge staff, tiny as it is, has simply not had much, if any, sleep tonight, as such we apologize in advance if things get confusing.

There was certainly much confusion for markets, and those traders, who went home after the close and did not check the news until this morning when they woke up to president trump.

As it dawned on markets that they had been caught flatfooted for the second time in half a year, first with Brexit and then with the historic election of Donald Trump which nobody except a few fringe websites had anticipated, their reaction was identical: a slow selloff at first, followed by a furious dump, which led to a limit down halt in NASDAQ and Emini future trading. However, it was not meant to last, and after realizing that Trump’s economic plan of flooding the economy with debt, coupled with fiscal stimulus, and that his policies would likely be much more moderate than his initial framing, U.S. stock-index futures trimmed about two-third of their declines as investors reassessed Trump stunning victory.

S&P 500 futures tumbled by the maximum 5 percent loss permitted on the Chicago Mercantile Exchange before trading curbs are triggered, then pared their decline to 2.2 percent as of 6:11 a.m. in New York. The restrictions last came into force in the wake of the Brexit vote and set a floor price for the contracts through the remainder of the overnight trading session.

Longer-maturity Treasuries sold off and copper soared to a 15-month high on speculation Trump will increase spending to spur economic growth. Swaps traders cut wagers on a Federal Reserve interest-rate hike next month. Mexico’s peso led emerging-market currencies lower amid concern U.S. trade policies will become more protectionist.

“It’s an amazingly impressive recovery off the lows for risk assets,” Craig Collins, managing director of rates trading at Bank of Montreal in London. “It’s very surprising given the feel the session had to start with, that it was a massive risk-off flight to quality bid. Now the early losses are getting erased and it looks like it could go unchanged on the day by the time the U.S. gets in.”

But while Brexit has been the most often compared event in terms of comparisons, the reality is that Trump’s victory was “on a completely different level to Brexit,” as Norihiro Fujito, a Tokyo-based senior investment strategist at Mitsubishi UFJ Morgan Stanley said. “The framework of the world will change, not only in terms of economies and the financial markets, but also in terms of national security, foreign policy.“

The S&P 500 Index cut its losses by more than half, sliding 2.4 percent in early morning trading, after earlier sliding as much as 5 percent as investors rushed to price in a Trump win. Contracts on the Dow Jones Industrial Average lost 360 points, or 2 percent, to 17,900. Elsewhere, Asian shares were lower in volatile trading as gold soared, oil declined, and the Mexican peso – the proxy for Trump’s success odds – plunged to record lows against the dollar leading emerging-market currencies lower, however it has since rebounded to roughly USDMXN 20. Industrial metals gained on expected pick-up in infrastructure spending.

View image on Twitter

Follow

Bloomberg ✔@business

Market turmoil eases after knee-jerk selloff around #Trump‘s victory http://bloom.bg/2eL0Jnl 

4:05 AM – 9 Nov 2016

• 156156 Retweets
• 6262 likes

A knee-jerk selloff in global stocks and a rally in haven assets eased amid speculation that Trump would increase fiscal spending to spur economic growth and as the Republican struck a more conciliatory tone in his first speech as president.

“In his speech, we saw Trump strike a markedly more emollient tone than he did throughout most of his campaign, which somewhat calmed the initial reactions,” said Ken Odeluga, a market analyst at brokerage City Index in London. “There is also the expectation that with Republicans in the Senate and House of Representatives as well, the party will exert a more benign influence on the White House. Still, it’s a shock and there is no getting away from it.” Earlier, declines in futures triggered the Chicago Mercantile Exchange’s limit down price curbs when the contract fell below 2,029. The rules come into effect when S&P 500 contracts decline 5 percent from a reference price that is calculated in the last 30 seconds of trading on the previous day.

“A Trump win is expected to damage trade,” said James Butterfill, head of research and investment strategy at ETF Securities in London. He’s been in the office since 3:30 a.m. “Traders are already expressing their worries through a depreciating dollar, which is bad news for European companies. Another problem for Europe is that there’s a populist wave going on, and this adds momentum to that. It’s worrying because we have so many elections coming up over here.”

The overnight losses followed a sharp rally that began Sunday night on news the FBI had resolved its investigation of Hillary Clinton’s e-mails, and hope that Hillary’s election was all but guaranteed. Heading into the vote, most polls had the Democratic candidate ahead by several points. The S&P gained 2.6 percent on Monday and Tuesday, its third biggest gain ever in the two days before a presidential election.

As Bloomberg writes, a Trump victory, buttressed by electoral gains from Florida to North Carolina, had been portrayed by analysts as having the potential to unhinge markets that had banked on a continuation of policies that coincided with the second-longest bull market in S&P 500 history.

The stock market has shown itself more comfortable with the Democrat taking over the White House as Trump is considered less predictable after his policy positions have not been consistent during the race. At stake is leadership of the world’s largest economy at a time when America is divided over immigration, trade and the country’s role in the wider world. Traders are especially on edge after the U.K.’s vote to leave the European Union was largely not predicted by polls and betting markets.

Fiscal Stimulus

After briefly plunging below 50%, the market-implied chance of a December rate hike by the Federal Reserve climbed back up to 84 percent, suggesting that in its post-kneejerk reaction, the market still expects Yellen to hike rates in one month’s time. There is just one question: will Yellen remain Fed chairman under president Trump.

The Treasury yield curve steepened, with the rate on 30-year bonds surging 13 basis points to 2.75 percent and the two-year yield sliding four basis points to 0.82 percent. The 10-year yield climbed five basis points to 1.91 percent after falling to as low as 1.71 percent. “Fiscal stimulus seems to be the most logical explanation, with Trump and a Republican Congress expected to deliver higher deficits,” said Gennadiy Goldberg, an interest-rate strategist in New York at TD Securities (USA) LLC, one of 23 primary dealers that trade with the Fed.

As Bloomberg noted, the bond market is voting with its feet. A Republican President, House and Senate suggest gridlock might be over, so President Donald Trump may be able to make good on his acceptance speech pledges:

“We’re going to rebuild our infrastructure…we’re going to put millions of people to work as we rebuild.”

A tax-cutting and big-budget extravaganza means Treasuries will have a hard time staying higher. They’re far from panic levels, but the curve has steepened sharply. German government bond yields have fallen, underscoring their role as the European destination for risk-off trades. The flip side of this story can be seen in the relatively modest yield gains in peripheral debt.Yet even this initial, somewhat-muted panic is subsiding. Europeans are Brexit veterans, so Trump’s “Brexit plus plus plus” isn’t quite the same reason to hold fixed income as some form of haven.

* * *

Market Snapshot

• S&P 500 futures down 2.4% to 2084
• Stoxx 600 down 0.5% to 333
• FTSE 100 down less than 0.1% to 6839
• DAX down 0.6% to 10415
• German 10Yr yield down 2bps to 0.17%
• Italian 10Yr yield up 5bps to 1.77%
• Spanish 10Yr yield up 2bps to 1.27%
• S&P GSCI Index up 0.3% to 355.6
• MSCI Asia Pacific down 2.7% to 134
• US 10-yr yield up 8bps to 1.94%
• Dollar Index down 0.32% to 97.55
• WTI Crude futures down 0.4% to $44.79
• Brent Futures down 0.3% to $45.92
• Gold spot up 1.9% to $1,300
• Silver spot up 1.4% to $18.64

Top Global Headlines

• GOP’s Senate Victory Sets Stage for Trump High Court, Agenda: Obamacare repeal, tax overhauls top Republican plans for 2017
• Drugmakers Jump as Republicans’ Victory Eases Regulatory Concern: Republicans’ sweeping victory in the U.S. elections eased concerns that Democrats would require broader regulation and controls on drug prices
• Fidelity, StanChart, UBS See Risk-Off Markets as Trump Triumphs: Trio among firms that see a period of global uncertainty and a flight to safety
• Anxious World Confronts the Reality of Trump as U.S. President: China pledges to work with new leader of largest trade partner
• Walgreens Sues Ex-Partner Theranos for Agreement Violation: Contract suit filed under seal in federal court in Delaware
• Alphabet Taps Brakes on Drone Project, Nixing Starbucks Partnership: Project Wing is the latest Alphabet project to be target of financial restraint
• Icahn More Than Doubles Hertz Stake as Earnings Miss Slams Stock
• OPEC Boss Warns of Oil-Market Instability If No Deal on Output

Asia markets saw significant downside, with Nikkei closing lower by 5.4%, before European participants arrived at their desks and tempered the initial panic. MSCI Asia Pacific Index declines, Japan’s Topix falls the most since Brexit, yen strengthens.  All 10 sectors fall with industrials, energy underperforming and telcos, financials outperforming

Top Asian News

• China’s Factory Prices Quicken as Drag on Global Inflation Eases: Oct. PPI +1.2% y/y vs est. +0.9%
• China Bank Regulator Said to Warn of Risks in Lending to LGFVs: CBRC’s Shang says some local governments evade borrowing curbs
• Hong Kong Flats Sell for Record Price, Defying Latest Home Curbs: Adjoining flats in Mount Nicholson sold for HK$912m
• Tencent Said to Budget $295 Million for Backing Movie Projects: Investments said to be used for films in China and Hollywood
• Thailand Holds Interest Rate Amid Market Turmoil, Growth Risks: 23 of 24 economists forecast rate to be kept unchanged at 1.5%

In Europe, the Stoxx Europe 600 Index fell 0.8 percent after sliding as much as 2.4 percent. The DAX trades -1.3%, financials and exporter names are the worst performers in Europe in the wake of Trump’s surprise victory, with outperformance seen in mining (Fresnillo +8.4%) and healthcare names (Shire +7.3%). This comes in the wake of criticism by Clinton of pharmaceuticals, while miners outperform given that significant upside seen in gold Gold and Silver. The initial significant shock in equity markets have pared significantly in the wake of Trump’s speech, where he struck a conciliatory and presidential tone. Fixed income markets have been equally volatile, with Bunds gabbing higher and trading above 163, before paring much of the initial gains to trade around the 162.00 level, while T-Notes now trade at yesterday’s levels. Of note, some analysts have highlighted expectations of a more hawkish Fed board during Trump’s term could be positively impacting. Losses were tempered by a rally in health-care stocks, which have
suffered amid speculation Clinton would push for drug-price controls as
president. Novo Nordisk A/S, Roche Holding AG and Shire Plc jumped at
least 6.5 percent. 16 out of 19 Stoxx 600 sectors fall with basic resources, banks underperforming and tech, financial services outperforming. 75% of Stoxx 600 members decline, 24% gain

Top European News

• World’s Biggest Wind Turbine Maker Sinks After Trump Victory: Vestas Wind Systems gets about 40% of sales from Americas
• Tesco Bank Pays $3.1 Million to Replace Cash Taken From Accounts: About 9,000 clients fell victim to fraud on weekend, firm says
• Alstom Spurns Shareholders Who Rejected Kron Pay Package: Board says 6.6 million-euro payout to Patrick Kron was legal

The MSCI Emerging Markets Index dropped 2 percent, the most in almost two months, amid concern over Trump’s protectionist policies. Hong Kong, South Korea and Taiwan suffered the biggest losses. Russia bucked the trend on speculation Trump will improve ties with Moscow, leading to an end to sanctions that have stalled an economic recovery. The Micex Index climbed 1.4 percent.

In FX, Mexico’s peso tumbled to a record 20.7818 per dollar and was the worst performer among currencies worldwide. Other higher-yielding currencies fell, with South Africa’s rand weakening 3.1 percent and Brazil’s real down 1.9 percent. South Korea’s won and Turkey’s lira both fell 1.3 percent.  Currencies viewed as havens strengthened, with the yen climbing 2 percent. While the euro gained as much as 2.5 percent, it gave up much of that advance to trade 0.7 percent stronger.

In commodities, Copper led gains in industrial metals, rising as much as 4 percent to $5,443 a metric ton, its highest since July 2015. Nickel advanced nickel climbed 2.4 percent and lead advanced 1.1 percent. Gold pared its biggest surge since the U.K.’s Brexit vote in June as a rush to haven assets abated. Bullion for immediate delivery was 2.2 percent higher at $1,303.80 an ounce, compared with a gain of as much as 4.8 percent earlier in the day. West Texas Intermediate crude was 0.2 percent lower at $44.89 a barrel, after losing as much as 4.3 percent. Brent was down 0.2 percent at $45.97.

DB’s Jim Reid concludes the overnight wrap

A Trump win is likely to be viewed negatively across a wide range of assets in the short-term (it already has as you’ll see below) but the range of medium-term outcomes are much wider. It increases the chance of higher fiscal spending but it will also reinforce the backlash against globalisation and associated forces of which migration policy and trade are obviously likely to be heavily scrutinised. So as the trend is already pointing to, expect lower risk assets at first, lower bond yields on a flight to quality but then higher yields once his spending plans are digested and an equity market that might at some point benefit from reflationary policies but with greater risks (lower trade and global openness) and higher volatility. First Brexit, now Trump and the 2016 anti-establishment triumvirate could be formed in less than 4 weeks by a ‘No’ in the Italian constitutional reform referendum. The political world is changing and the consequences are likely huge over the years ahead. As we discussed as the main theme in our long-term study in September (An Ever Changing World), the 35-year super cycle in assets, politics, policy and globalisation has likely turned.

Demographics are slowly reversing the super cycle but more importantly in the short-term it felt to us that politicians would either have to address the mass disaffection to current policies and trends of this 35 year super cycle or face a wave of anti-establishment support and eventually being thrown out. Well Trump, assuming he wins, is a perfect example of this.

It’s very easy to say this is a big negative for the global economy but current policies around the world are perpetuating the soporific post GFC recovery. A shake up is badly needed but whether Trump is the right version of the shake up is open to debate. If Trump wins then that could increase the odds of both a better medium-term economic outlook and also a worse economic outlook. It also has geo-political ramifications that are hard to contemplate at this stage. EM looks vulnerable as US self interest could dominate. Trade deals could be ripped up. Ironically Trump has hinted that a trade deal with the UK could be a priority!! As an aside as someone that loves skiing, I do worry about climate change as a result of this result as Trump has threatened to pull the US out of the Paris climate change agreement. More time for cycling up mountains maybe rather than skiing down them.

It was almost impossible to keep up with the early moves in markets overnight as the initial state counts got announced with the nail biting Florida race in particular causing FX markets to swing wildly. Right now though, risk aversion dominates. S&P 500 futures are limit down -5.00%, bourses in Asia are down anywhere from -2.00% to -4.00%. The Mexican Peso has tumbled -13.20% while the South African Rand has collapsed -4.24%. Meanwhile the Japanese Yen has surged +3.83% and the Swiss Franc +2.30%. Credit markets in Asia-Pacific are 5-7bps wider. Gold has jumped +4.40% and Oil is down -3.87%. It’s hugely volatile though, so it’ll be worth a refresh when this hits your email.

As a complete sideshow to the Election overnight, the October inflation data was also released in China this morning. CPI was reported as increasing to +2.1% yoy as expected, up from +1.9% in September, while PPI has risen to +1.2% yoy from +0.1%, a little bit more than the consensus had forecast. Its worth noting that that PPI print is the highest since December 2011 – the second positive YoY reading after 56 months in negative territory.

Well Tuesday feels like a long time ago and given that it is now largely irrelevant and consigned to history, we’ll keep yesterday’s recap very brief, ignoring the market moves and focusing on some of the highlights. The more interesting news yesterday away from all things US Election related was the announcement from the UK Supreme Court that the appeal hearing has been officially confirmed for the four days starting December 5thalthough the exact number of hearing days depends on further submissions received from parties. A reminder also that the Italy constitutional referendum date is December 4th, the ECB meeting is on December 8th and the Fed meets on December 14th. Back on Brexit, the UK Telegraph is suggesting that a group of pro-Brexit Conservative MP’s are pressing for a debate next week leading to a vote to start talks on leaving the EU. It promises to be a busy end to the year.

Yesterday we also heard from the hawkish Chicago Fed President Charles Evans. Evans, who has a vote in the FOMC in 2017, said that ‘my outlook is strong enough and I’m optimistic about inflation increasing that I think that perhaps as many as three rate increase from where we are today could be appropriate’. Evans did however cite some concerns with inflation expectations, saying that expectations ‘have been moving down in a way that’s not consistent with 2%’. He said that ‘the way to change that was to assure the public the Fed would meet its goal and that in order to do that, we’re not going to pull back too quickly’. Those comments are in contrast to the much more dovish set of comments from the ECB’s Coeure yesterday. He said that the ECB’s ‘highly accommodative monetary policy remains appropriate and will continue to be appropriate until inflation is firmly back on track and heading towards 2%’.

With regards to the data yesterday, in the US we learned that JOLTS job openings in September rose to 5.49m from 5.45m in August and more or less matched expectations as per Bloomberg. The job openings rate nudged up one-tenth to 3.7% while the hiring rate slid by the same amount to 3.5%. Meanwhile, the NFIB small business optimism reading rose from 94.1 to 94.9 this month, the highest reading since December last year. Data in Europe was characterized by softer than expected industrial reports for Germany and the UK. With regards to the former, IP declined -1.8% mom in September (vs. -0.5% expected) which had the effect of lowering the YoY rate to +1.2% from +2.4%. In the UK IP weakened -0.4% mom in September (vs. 0.0% expected), although manufacturing production was up a slightly better than expected +0.6% mom (vs. +0.4% expected).

3a)THAILAND/SOUTH KOREA/:

none today

b) REPORT ON JAPAN

China is certainly not happy to see Donald Trump in the White House as he proposes to bring back manufacturing onto USA shores with USA manufacturers. China sent a strong message to President elect Trump on his “first day” by liquidating massive amounts of treasuries:

(courtesy zero hedge)

China Is Suddenly Dumping Treasuries

end

Russia’s huge carrier group arrives close to Syria and ready to launch Aleppo air strikes

Russian Carrier Group Arrives Next To Syria, To Launch Aleppo Air Strikes “In Hours”

end

We must now be thankful that we do not have to worry about Neo-Cons starting a fight with Russia;  Putin congratulates Trump and is now ready to restore relations with the USA

If you think that the election is your worst fears, guess again.  Here is a summary of events coming to our “theatre” in the coming days:

Election Fatigue? We Have Bad News For You

END

END

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

The POUND ROSE 41 basis points, trading at 1.2424/

The Canadian dollar fell by 130 basis points to 1.3426, AS WTI OIL ROSE TO :  $45.29

WTI CRUDE OIL PRICE 5 PM:$45.34

BRENT: $46.51

USA 10 YR BOND YIELD: 2.066%

USA DOLLAR INDEX: 98.65 up 68  cents

The British pound at 5 pm: Great Britain Pound/USA: 1.2391 up .0008 or 8 basis pts.

German 10 yr bond yield at 5 pm: +.203%

END

The phone call between Trump and Clinton last night?

This was the best day-after-presidential-election since Reagan in 1980…

Before you flip past this chart – look at the scales!!! Utterly massive swings in VIX futures, Gold, the peso , and stocks…

From yesterday’s close, US equity futures crashed limit-down, only to rally massively into the green…

Not since the Plunge Protection Team stepped in after Bush’s reassurance in Oct 2008…

On Friday, October 10, stock markets crashed across Europe and Asia. London, Paris and Frankfurt dropped 10% within an hour of trading and again when Wall Street opened for trading. Global markets have experienced their worst weeks since 1987 and some indices, S&P 500, since the Wall Street Crash of 1929.

 

On October 10, within the first five minutes of the trading session on Wall Street, the Dow Jones Industrial Average plunged 697 points, falling below 7900 to its lowest level since March 17, 2003. Later in the afternoon, the Dow made violent swings back and forth across the breakeven line, toppling as much as 600 points and rising 322 points. The Dow ended the day losing only 128 points, or 1.49%. Trading on New York Stock Exchange closed for the week with the Dow at 8,451, down 1,874 points, or 18% for the week, and after 8 days of losses, 40% down from its record high October 9, 2007. Trading on Friday was marked by extreme volatility with a steep loss in the first few minutes followed by a rise into positive territory, closing down at the end of the day. In S&P100 some financial corporate showing signals upwards also.

 

President George W. Bush reassured investors that the government will solve the financial crisis gripping world economies.

have we seen such a massive intraday swing…

Bigger turnarounds only happened three times before, twice in the final months of 2008 and the other in October 1987, data compiled by Bloomberg show.

With Dow Futures scaling a stunning 2100 points (1000 down and 1100 up) intraday (to record highs)

Small Caps were the day’s best performer of the major cash indices…

This was the biggest short squeeze since the day after Brexit (“Most Shorted” stocks are now up 4 days in a row)

FANGs were all sold…

Volume was very heavy – biggest since Brexit

VIX ended with a 14 handle after trading over 23 overnight…

Bonds were a total bloodbath today…

The long-end saw yields swing almost 40bps from low to high – a massive move…

The biggest percentage move in 10Y yields ever…

It looked a lot like Chinese selling…

The USD Index swung violently lower and then higher to close well above 98.00…

As only cable managed gains against the greenback…

The Mexican Peso collapse by the most since The 1994 Tequila Crisis, bounced back a little, but ended down almost 9% on the day…

Silver and gold ended the day unchanged as copper soared for the 13th straight day – another new record streak (even after tumbling overnight)

END