Doug Kass shares his views every day on RealMoneyPro. Click here for a real-time look at his insights and musings.
Changing Leadership in a Trump World
Originally published Nov. 21 at 8:27 a.m. EDTThe Trump rally was two weeks old on Wednesday. It has carried the small-cap index and Dow Jones Industrial Average to new highs and the Nasdaq Composite and S&P 500 close to new highs.
However, looking under the hood discloses a change of leadership and more of a mixed picture. Indeed, conflicting group performance is as great as the last time we observed it--back in the first quarter of 2000, when tech screamed higher as consumer and industrial stocks faltered.
By March 2000, at the near end of that year's first quarter, there was an inflection point in which tech cracked and many of the out-of-favor groups began to recover.
March 2000 marked a major change in leadership and market direction.
To me, the extended tech bull market that came to an end in the first quarter of 2000 compares to the extended bond market run, which seemingly came to its conclusion four months ago. Recently the crack in bonds has accelerated, signaling a major shift in the three-decade bull market in bonds--something I have described as a Generational Bottom in Bond Yields.
The Trump victory has produced selling in bond-equivalent stocks and buying in financial and industrial stocks.
The questions at hand are (1) whether the new leadership is simply an election-related bump or something bigger, and (2) whether this leadership change is occurring (as is typical historically) to a bear market.