(New York)

One of the world’s most respected financial columnists—John Authers—has just put out an article arguing that we may be at the bond market’s Dotcom moment. Authers cites the gigantic hoard of negative yielding debt, as well as many charts of soaring 100-year bond prices (check out Austria’s and Mexico’s), to show that the bond melt up may be set to reverse. He argues that at some point soon (it could have already started with the reversal in ten-years yesterday) that investors will revolt against super-low yields, sending prices lower and yields higher. Authers thinks the spark may be unexpectedly higher inflation, which would undermine the whole premise of recent gains. Tariffs are inflationary by definition, so it is not far-fetched to think this could occur.

FINSUM: We think it would take a significant catalyst to cause a big bond pullback (like a much higher than expected inflation report, a suddenly hawkish Fed etc). That is not out of the question, but it does not seem likely.

(Washington)

It has been a bad week for President Trump and his reelection chances appear to have taken a hit, argues Bloomberg. The reason is that the events of the last week have hurt him in three key areas: suburban voters, rural voters, and industrial states. The massacres of the last week, and Trump’s reluctance to push tougher gun laws, will likely harm him in critical suburban areas, where Democrats have been taking votes. Additionally, on the trade war front, both rural voters and industrial states are likely to be upset at recent developments, which could wound the President further.

FINSUM: We think polls still aren’t doing justice to Trump’s chances, but we have to agree that the last week has not done him any favors.

(New York)

There are a lot of retirees, or near retirees, who have not had to navigate real market volatility for around a decade. And as any retiree knows, high volatility in or at retirement is a very scary prospect. However, there are ways to navigate it. Some tips including keeping a cash buffer, going bargain hunting in the market to find undervalued stocks, and re-evaluating stock exposure. Rotating into sectors that do well in downturns, like consumer staples, healthcare etc, can also be smart.

FINSUM: This is good advice. That said, the US may not be headed into a really bad economic and market scenario, so it may not be wise to get too defensive.

(New York)

Societe Generale, famed European investment bank, has just told investors they should load up on gold. Gold is seeing several value drivers at the moment. These include the economic cycle and fears over the trade war, a lack of other safe haven assets, and importantly (and much less known), central bank purchases. Global central banks (like China’s) are trying to diverse away from the Dollar, and gold is an attractive way for them to do so.

FINSUM: There are a lot of tailwinds for the yellow metal right now. The Fed is less dovish than most expected and there does not seem to be much risk of a huge risk-on shift that would leave gold forgotten.

(New York)

Markets have indigestion this week, but is a recession any more of a threat than it was a couple weeks ago? The answer is yes. So far the manufacturing side of the economy has been the weaker one, with the consumer side staying strong. However, all the tariffs that have been imposed on China will now hit the side of the US economy that is strongest—the consumer—by raising prices at the register. Therefore, the trade war will directly weaken the best part of the economy, which could seriously curtail growth.

FINSUM: To protect against this, investors may want think about shifting into defensive shares like consumer staples, healthcare, utilities, and real estate, all of which tend to outperform cyclicals in a down economy/market.