I don't expect to make any changes. I do expect a return to big swings in equity markets off tweets again though.

I prefer to take positions on things i think i have a chance to predict. re Trump who knows, not even him, you have to play that off the pitch a bit

be alert, not alarmed and see what he can do to impact your companies, there will be a lot of rhetoric to confuse the issue

Unpredictable is about right @Solvetheriddle.

The reaction of bonds vs equities is extremely telling imo @Clio and am surprised it's not getting more attention. Conventional wisdom would suggest that uncertainty would be a positive for the classic 'safe haven' asset of bonds, at least during 'normal' times.

But these aren't normal times, I suppose, and for me the interpretation is an expectation of higher for longer inflation. Indeed, it was interesting to core CPI back on the rise again in the US.

To tease that out -- if you expected higher for longer inflation, you'd demand a higher interest rate on any money you lend (or bonds you buy), to help offset the loss in purchasing power. At the same time, high quality growth stocks (which offer the hope of sufficient profit growth to deliver a decent real return), or more defensive stock like staples, energy, utilities etc (that can more easily pass on inflationary costs and enjoy relatively stable demand) become more attractive -- even in the face of the potential for a more general economic malaise.

So, Trump's cutting taxes and firing a bunch of public servants (who represent around 14% of the total workforce -- or as much as 20% if you include govt. contractors & grant funded positions etc), as well as introducing tariffs and other counter-productive trade and economic policies, is very likely going to worsen an already fragile deficit situation. Demand for US treasuries is already weakening with many of the biggest holders reducing their exposure (esp. China) -- that ultimately means debt monetisation, and that means more inflation.

The structural issues at play are much bigger than the current administration, but they will likely help accelerate things.

I cant predict the future better than anyone else, but I suspect we could see valuations sit above historic norms more as a consequence of investors (big investors, at least) prioritizing capital preservation over strong real returns. That is, if you're managing billions, you'll take over-valued by high quality equity assets over negative real-return bonds. Neither are great options, but there is a least worst option.

Interesting presentation and long format interview with Jerome Powell at the Dallas Fed overnight.

Powell Speaks at Dalla Federal Reserve

He tries very hard to avoid getting drawn into commentary or speculation on fiscal policy and politics, but it is clear much through what he doesn't say, about what's on the Fed's mind looking into 2025.

And then, in contrast, a nice super clear interview on Bloomberg with my favourite macroeconomist Mohamed El-Erian, He's pretty clear that neutral US inflation is going to be 2.5%-3% and even though the Fed won't talk about that being the real target, he's hoping they essentially target it via a sufficiently slow "glide path". He sees the Fed getting down to 4% interest rate, but it being much harder after that. Another 25bps in Dec, but the path thereafer is less certain.

Interview with El-Erian

Then afterward, Mohamed tweeted the following:

"I doubt Fed Chair Powell will do another interview like this anytime soon. He struggled with some of the smart questions, often deflecting with historical explanations, and he confused the economics of different possible scenarios. His response to the question on a new monetary framework will likely leave many perplexed".

I think this is all reasonably reflected in the bond markets, particularly the moves in recent weeks on the 2yr and 10yr US.

A rock and a hard place for Powell...Cut too much and inflation gets even worse. Don't cut enough and the debt becomes increasingly burdensome and risks economic stability.

I only saw the highlights, but I agree with Mohamed @mikebrisy -- he definitely struggled with some very reasonable questions. I'm sure he has firm views in private, but despite the illusion of being an independent operator, politics is very much a factor here.

Still, its very annoying when Central bankers simply hand wave away entirely sensible and reasonable questions.

Expect anything associated with biotech, medical or pharmaceuticals to get hit on Monday. Except for Promedicus of course.

https://www.abc.net.au/news/2024-11-15/donald-trump-nominates-rfk-junior-to-head-federal-health-agency/104604110

Although Kennedy is a vaccine skeptic, his anti-science views could extend to other areas of health.

@edgescape - although much anticipated, the announcement came out late Thursday, so it was in the US for the Friday trading day.

From the selection of stocks I've looked at below, the big vaccine makers have been hit hardest (top 4 on the list below), but interestingly, medical devices have fared pretty well, with the 4 at the bottom of the list being big medical devices makers. IART and GEHC also big in medical devices, but weren't down nearly so much as the vaccine makers, on what was a big down day for the market.

It remains to be seen what Kennedy will do - beyond vaccine mandates, fluoride in the water, and the nutrition mandate of the FDA. On the latter, there is something seriously wrong with food labelling in the US. There is no shortage of books and films that have blown the whistle on the regulatory capture by the food industry. So it is an area that probably needs some serious reform.

He also seem's focused on chronic disease, which should be good for conditions like obesity, diabetes, OSA, and firms that serve these. He has said things against DTC marketing of drugs.

So, while his appointment introduces a wild card into the world's biggest healthcare market, the agenda is Make America Healthy Again! My guess is, if his appointment is confirmed, there will be winners and losers, and I think that's where the market is too.

Below is an article from the WSJ on the subject:

Updated Nov. 15, 2024 11:15 am ET

WASHINGTON—Investors slashed billions of dollars off the value of the world’s top vaccine makers after President-elect Donald Trump nominated environmental lawyer and vaccine skeptic Robert F. Kennedy Jr.as health and human services secretary.

Shares in Pfizer fell 2.6% on Thursday, erasing roughly $4 billion from its market value, and were down 3.5% in Friday trading. Shares of BioNTech and Moderna also fell sharply. In Europe, shares in Danish Mpox vaccine maker Bavarian Nordic fell 17% Friday, while pharma heavyweights AstraZeneca, GSK and Sanofi dropped 3% or more.

Kennedy has promised sweeping changes to food-and-drug regulation and government-funded scientific research, in recent days saying the Food and Drug Administration’s nutrition department needed to be eliminated and warning the agency’s employees to “pack your bags.”

Kennedy, 70 years old, abandoned his independent presidential bid in August and endorsed Trump, promising that he and the Republican would work to “make America healthy again.”

Kennedy said on social media after his nomination that “we have a generational opportunity to bring together the greatest minds in science, medicine, industry, and government to put an end to the chronic disease epidemic.”

Earlier, in his own social-media post, Trump wrote: “For too long, Americans have been crushed by the industrial food complex and drug companies who have engaged in deception, misinformation, and disinformation when it comes to Public Health.”

Billionaire Elon Musk and one of the president-elect’s sons, Donald Trump Jr., both advocated behind the scenes for Trump to pick Kennedy, according to people familiar with the discussions. Trump transition team co-chair Howard Lutnick previously had said that Kennedy wouldn’t head the department if Trump won the election.

The scion of an American political dynasty, Kennedy in recent years has been best known for his critiques of public-health leaders’ approaches to the Covid-19 pandemic and vaccines. He has argued that unhealthy food, medicines and water have fueled the rise of chronic disease in America, and that government regulators have been corrupted by corporate influence.

Kennedy, who could face a tough confirmation battle, would take over a department with an annual budget that tops $1.7 trillion, more than 80,000 employees and 13 operating divisions, including the Centers for Disease Control and Prevention, the National Institutes of Health and the FDA. Most of its spending goes to Medicare and Medicaid.

The department funds healthcare for millions of Americans, including the elderly and disabled; decides which drugs are safe and effective; investigates food-borne illnesses; prepares for pandemics; funnels tens of billions of dollars to basic scientific research, and much more.

Kennedy has pledged to advise against fluoride in drinking water—a stance that would put him at odds with public-health officials. He has said he would ask for more data on vaccine safety to be made public, though he told NBC last week he wouldn’t “take away” vaccines. He is also eager to investigate food colorings and pesticides restricted in European countries but widely used in the U.S.

Kennedy made the case to Trump’s advisers that he would be able to enact more sweeping change as HHS secretary than he would as the administration’s health czar, the other position he was being considered for, according to people familiar with the matter. He has told associates one of his goals as secretary is to overhaul the department’s subagencies, including the FDA, the people said.

Like other Trump allies, Kennedy has spent much of his time at Mar-a-Lago, Trump’s private Florida club. He is renting a house owned by Mehmet Oz in Palm Beach, near the Trump estate, people familiar with the matter said.

Kennedy’s nomination is another setback for antiabortion groups whose relationship with the president-elect is already strained. Kennedy at one point said he supported banning abortion after the first trimester of pregnancy but later endorsed broad abortion access. Antiabortion groups were hopeful that a Trump health department would tighten access to abortion pills.

Scientists and public-health leaders have said they are worried about Kennedy’s influence if he were to land a position of power in Trump’s administration, pointing to children’s measles-vaccination rates that are already below the health department’s targets and dropping. Vaccine scientists worry he could put his fellow vaccine critics on boards overseeing immunization advice.

“He’s a science denialist,” said Dr. Paul Offit, an infectious-disease physician at Children’s Hospital of Philadelphia. “He’s taken his name, which is a famous name, and used that as a platform to frighten parents unnecessarily about vaccine safety.”

Kennedy would face some barriers to broad changes. He has pilloried the user fees that drug companies pay to the FDA to ensure the agency has the staff needed to do speedy reviews of drug applications. But eliminating those fees would require congressional action.

In other areas, Kennedy would have free rein. Drug-approval decisions are typically made by career staff scientists, but they can be overturned.

“It’s totally within the law for the president or the HHS secretary to overrule the entire FDA,” said current FDA Commissioner Robert Califf this week before a gathering of cancer researchers. “So that could happen.”

Trump’s selection of Kennedy underscores how willing he is to back controversial nominees and ignore objections from regulated industry and even members of his first administration with more traditional health-policy credentials.

Kennedy might face a difficult path to confirmation, as public-health allies in the Senate are likely to be wary of his views on vaccines especially.

Although Republicans are set to take control of the Senate in January, Trump has demanded that the chamber suspend its power to confirm nominations and instead go out of session so that he can use “recess appointments” to install at least some administration officials, such as cabinet secretaries, without Senate approval. The demand has taken on greater urgency after Trump has floated controversial nominees, including former Rep. Matt Gaetz of Florida for attorney general.

Sen. Bill Cassidy (R., La.), the ranking member of the Senate’s health committee, said in a statement: “RFK Jr. has championed issues like healthy foods and the need for greater transparency in our public health infrastructure,” adding: “I look forward to learning more about his other policy positions.”

Incoming Senate Majority Leader John Thune (R., S.D.) didn’t comment directly on the Kennedy pick and emphasized that the broader nomination process was just getting started. “I’m not going to make any judgments about any of these folks at this point,” he told reporters, adding there will be “plenty of scrutiny of these nominees’ records when the time comes.” 

Initial Democratic reaction was mostly negative. Sen. Patty Murray of Washington said the selection “could not be more dangerous” given Kennedy’s past statements on vaccines. But Gov. Jared Polis of Colorado said the pick excited him, posting on X: “hope he leans into personal choice on vaccines rather than bans (which I think are terrible, just like mandates).”

Kennedy is the third child of Robert F. Kennedy, who served as attorney general under his brother, President John F. Kennedy. Kennedy Jr. spent his early career as an environmental lawyer, suing companies that activists blamed for polluting rivers. A longtime Democrat before his independent presidential run, he has said he twice sued Trump in the 1980s to block his golf courses from being built or expanded. In 1999, Time magazine named Kennedy one of its “Heroes for the Planet.”

In 2005, he wrote an article in Rolling Stone and Salon.com linking vaccines to autism. Both publications issued corrections to the article, and scientists have shown Kennedy’s claims to be false. A 2015 study in JAMA of the health records of 95,000 children showed the MMR vaccine didn’t increase the risk of autism.

Kennedy founded the nonprofit Children’s Health Defense, where for nearly two decades he continued to question vaccine scientists and public-health officials. Kennedy repeated his claims that vaccines leave children at higher risk for autism in a podcast with Joe Rogan that aired in June.

Kennedy has questioned the safety of the Covid-19 vaccines, using unverified reports to conclude they are the “deadliest vaccines ever made.” All medical interventions have risks, but the Covid-19 shots’ benefits outweigh their risks and are safe, public-health officials have said.

Kennedy has also questioned whether HIV causes AIDS. The National Academies of Science said in 1988 that HIV causes AIDS is “scientifically conclusive.”

Kennedy has insisted that he isn’t “antivaccine” and instead wants transparency and informed consent for parents.

A former heroin addict, Kennedy attends Alcoholics Anonymous meetings daily and has said he wants to fight opioid-overdose deaths by making addiction treatment simple and affordable.

He has said that since 2005 he has prayed every morning that God would allow him to “end the chronic disease epidemic.” He views the role leading HHS as an answer to that prayer, a person close to him said.

Kennedy is married to actress Cheryl Hines. She is writing a book about his presidential campaign, he said in a podcast interview Nov. 9, and one of the titles she is considering is: “I didn’t see this coming.”

Anna Wilde Mathews, Rebecca Ballhaus, Laura Kusisto, Xavier Martinez and Dana Mattioli contributed to this article.

Write to Liz Essley Whyte at [email protected], Andrew Restuccia at [email protected] and Vivian Salama at [email protected]

@mikebrisy Hard and not straightforward.

I have OMCL which is a medtech for drug dispensing, and that fell but I will make that as an exception as I believe there are some issues with succession and the "CEO is the Chairman" story.

There's been a bit of a delayed reaction last night (or during the American trading period) before the sells gained momentum.

Was tempted to catch Corvus but then perhaps I wait...

The FDA nutrition page has a few good pointers

I would think ALS labs be a bit of a loser in this with the POTUS shift from environmental and medical and yet it is still holding up 14.85.

Must be a lot of boomer investors on ALS holding for the dividends.

Yes I'm still regretting selling ALS at $12.

Clio I strongly agree reference wild gyrations. It's going to be a rocky few years IMHO.

• CAPE/Schiller PE up near 2021 highs and only time it was higher than that was the tech bubble.
• US yield curve has uninverted.
• US has high debt and bond yields increasing.
• Fed dropping interest rates.
• Plans to drastically reduce the size of US government

If you said these are conditions for a strong growing economy and market prices I wouldn't believe you... I think of Howard Marks saying along the lines of you can't predict the future but you should know where you are in the cycle...

Given the 10yr bond yield has moved from 3.6% to 4.4% since September while the Fed dropped rates, I think the market may be saying something already. Im hopefully any reckless policy will actually be policed by the market in the end. Based on the example set in the UK with Liz Truss's policies and how markets reacted there. Unless by miracle masterstoke Trump's tariffs raises enough tax revenue to pay the debt while at the same time inflating away the debt but that's almost a nil probability.

What am I doing right now... Not buying US indexes and maybe looking to trim when the time comes. Overall looking to build cash where I can. Individual companies I own doing nothing different. Individual companies fundamentals and execution always have stronger impact on their future earnings than the economy as a whole.

Just published in the past half hour on the AFR site: Aussies in the Trump camp:

Rinehart’s right-hand woman still partying at Mar-a-Lago

Gina Rinehart’s flown home but Teena McQueen’s still at Mar-a-Lago, dancing to the YMCA with Argentinian President Javier Milei.

Myriam Robin and Mark Di Stefano, Sunday Nov 17, 2024 – 3.26pm

Ten days on from Donald Trump’s historic election win, and the party’s still raging at Mar-a-Lago.

Don’t believe us? Check out the viral videos of Argentina’s libertarian president, Javier Milei, boogying to the Village People’s YMCA as he made his way down Mar-a-Lago’s hall to meet the incoming US president.

And as Milei made his way through the throng, whose table did he pause in front of but that of the equally effervescent Teena McQueen, basking in their shared and unbridled joy. Yes, we speak of the ex-Liberal Party vice president, who these days is on Gina Rinehart’s payroll.

Gina Rinehart with former Liberal Party vice president Teena McQueen (left), and Nigel Farage, the leader of the conservative party UK Reform, at Trump’s election watch party. 

Not since Adelaide PR operative Ian Smith busted his moves in front of pop star Rita Ora has an Australian boomer had such a gas on the world stage. And believe us, McQueen had a ball. “It was magnificent,” she gushed on Sunday. Aren’t bonfires fun.

McQueen was there attending “meetings and a conference”, the latter being the investor forum of the Conservative Political Action Conference, held – where else – at Trump’s gilded home this past weekend. A senior member of Hancock Prospecting’s executive team ingratiating herself with the incoming presidential administration could open up many new avenues, both commercial and political.

Remember: the last time around it was Greg Norman who put Trump and then-prime minister Malcolm Turnbull together for their combustible phone call. Are Rinehart and her minions set for some type of grease-wheeling role in the new world order? Along with new Yank and fellow Mar-a-Lago member Anthony Pratt, two of Australia’s most iconoclastic billionaires are giving every indication of settling into permanent orbit around the Trump administration.

Rinehart herself has ended her extended stay at the Florida private club, though not before making an impression. She was profiled this weekend in The Wall Street Journal, which noted the Australian billionaire’s growing US investments as well as her long-standing support for the incoming president. Oh, and her presence at the Mar-a-Lago Halloween party last month, where she held a “drill baby drill” sign while posing with Trump’s daughter Tiffany Trump.

Of course, if Team Trump is still giddy with excitement, elsewhere, decorum prevails.

In Washington DC last Friday, Australian Ambassador to the United States Kevin Rudd hosted the annual Friends of Australia Congressional Caucus dinner. Connecticut Democratic congressman Joe Courtney was given an Order of Australia for his “advocacy and leadership”, in front of US politicians like Andy Barr, Pete Ricketts and James Moylan, none of whom seem particularly Trump-y. The Australian embassy put out numerous social media posts and an extended video of the soiree, which, again, looked perfectly respectable.

Rudd is apparently on borrowed time as ambassador, having offended Trump in years past by giving an honest assessment of a man most people have long considered a buffoonish monstrosity. Well, now Trump is in the ascendancy, keeping his friends close and enemies frozen out. But never mind the history and just consider the vibe.

Team Australian Embassy is having a tea party. Team Trump is staging a multi-week rager. Ominous? After all, some crowds just don’t mix.

--- ends ---

Related

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The overwhelming majority of my investments are unlikely to be impacted at all, but one of my highest conviction holdings -- Novonix (NVX) -- is the exception. Despite the company not being relevant to many, some other Straw-folk might hold battery/material/mining companies in the US, so sharing my thoughts in case anyone is interested.

Under a Biden/Harris administration, Novonix were in a great position. The government purse in its corner, in addition to policy which would ultimately force US-based customers to buy their product. That isn't to say the US would get nothing from this arrangement; my investment thesis is the US desperately need anode (synthetic graphite) production onshore in the event that China weaponise it, so they will do everything they can to support Novonix, the first movers.

Enter Trump. He may well be good for Novonix but I am nervous. The IRA could well be dismantled in favour of whopping tariffs on the Chinese. No doubt Trump wants to do this, but they will have to get it through Congress which should be VERY difficult due to the Republican states that stand to gain lots from the IRA. Trump typically hasnt supported the electric vehicle/ESS movement, preferring to protect the auto industry. Up steps Musk and wins Trump over by throwing millions of dollars his way pre-election. He now finds himself in Trump's inner circle, so what does this mean? Honestly, who knows. Theoretically, it should mean that Trump won't shit on EVs like he was planning to, with Musk lobbying on behalf of the broader industry. But it might also mean he will listen to Musk, who has lobbied hard against graphite tariffs due to a lack of adequate options onshore (which Novonix is trying to address by scaling up). Musk stands to gain in a big way, removing the IRA will hurt their competitors.

Worst case scenario, the IRA is dismantled and an exclusion is reinstated on the graphite tariff. This doesn't incentivise onshore businesses to acquire anode onshore. The Chinese can produce this much cheaper -- albeit by absolutely shitting on the environment and their workers -- so you'd assume most will continue importing from China like they have done for many years.

I think Novonix has a great future ahead, but like it or not, they are reliant on the US government over the next few years to help them scale up and get to where they want to be.

A conundrum and a half. This is a very negative take obviously, it may well turn out positive if Trump can't get the IRA removed and then increases relevant tariffs currently in place.