WHERE WILL STOCKS AND INTEREST RATES GO IF TRUMP’S ‘BIG, FAT, UGLY BUBBLE’ BURSTS? $TLT $TBF $TBT $SPY $QQQ $IWM $GLD $SLV

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WHERE WILL STOCKS AND INTEREST RATES GO IF TRUMP’S ‘BIG, FAT, UGLY BUBBLE’ BURSTS? $TLT $TBF $TBT $SPY $QQQ $IWM $GLD $SLV

In the first presidential debate, Donald Trump said, “Now, look, we have the worst revival of an economy since the Great Depression. And believe me: We’re in a bubble right now. And the only thing that looks good is the stock market, but if you raise interest rates even a little bit, that’s going to come crashing down.

“We are in a big, fat, ugly bubble. And we better be awfully careful. And we have a Fed that’s doing political things. This Janet Yellen of the Fed. The Fed is doing political — by keeping the interest rates at this level. And believe me: The day Obama goes off, and he leaves, and goes out to the golf course for the rest of his life to play golf, when they raise interest rates, you’re going to see some very bad things happen, because the Fed is not doing their job. The Fed is being more political than Secretary Clinton.”

Is Trump right?  

Trump is not exactly right, he’s pretty close.

Stocks are in a bubble on an absolute basis. But since stocks compete with bonds, absolute basis does not count. It is the relative basis that counts. Relative to bonds, stocks are not in a bubble.

Trump did not specifically mention bonds, although he implied bonds by the reference to Yellen. In any case, in my opinion, bonds are definitely in a bubble induced by the Fed…Read more at MarketWatch 

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