Bloomberg macro strategist Simon White found that the continued rise of U.S. stocks and the decline of gold after the U.S. election are consistent with historical patterns.
If past experiences are still indicative, the stock market may not face resistance until January next year after Trump's inauguration, while gold may have to wait until then to rebound.
Since the election, the drop in U.S. stocks has been minimal. The S&P 500 index has only fallen about 1.3% from its short-term peak, and the current upward trend appears intact.
Since 1932, U.S. stocks have averaged gains after elections. Historically, this trend does not change until after the inauguration of the new president. While this time may not develop in exactly the same way, it is worth remembering that the stock market's optimism about the election may persist until the end of the year before facing a breather.
Gold has also roughly followed the post-election pattern. Historically, it tends to be sold off before the election, with a faster decline after the election. The difference this time is that gold rose before the voting day on November 5, and the sell-off after voting day was more severe than the historical average.
If the past repeats itself, gold may start to rebound after the inauguration of the new president.
However, Wednesday's situation (the resurgence of geopolitical tensions between Russia and Ukraine) reminds investors that there are plenty of other reasons to boost gold before the new president takes office.
The dollar has also largely followed its historical pattern after the election, with this rebound similar to that of the 1972 election year.
White believes that among all the 'Trump trades', the dollar rising is one of the trades most likely to eventually get into trouble, given the proposed policies of the new administration.
Article reposted from: Jin Shi Data