Cedar Portfolio

Trading Perspectives from Yra – September 23, 2019

Veteran Floor Trader Yra Harris


  1. The continued increase in BOND PRICES as markets turn the tables on long-held asset management. As one analyst /trader noted, it used to be standard practice to buy BONDS for income and stocks for capital appreciation. It seems that the actions of central banks have led to the opposite market behavior as BOND prices rise in anticipation of further central bank rate cuts. S&P dividends on high-quality value stocks are higher than sovereign and corporate bond yields.
  2. Precious metals have sustained the gains of the last 11 years after enduring some sizable corrections. The recent awakening to the failure of central bank policy has supported a gold rally even as equity prices continue to press all-time highs. The GOLD has performed well versus all FIAT CURRENCIES as the credibility of all global monetary policy is being challenged.
  3. The DOLLAR has held its strength because of the FED‘s initial desire to attempt to NORMALIZE its interest policy, as well as its balance sheet. But the Powell pivot has questioned how long the interest rate differential will continue to support the DOLLAR in the face of expanding deficits during times of relatively strong growth. (Especially as President Trump attempts to strong-arm Chairman Powell into lower for longer in response to tariff conflicts created by the White House. Tweeting has become the tool of Presidential bullying instead of invitations to a Texas ranch.)

If the Reinharts are correct — and I believe they are — then the move from MONETARY STIMULUS to FISCAL STIMULUS ought to provide some inflows into economies looking to sustain growth through massive infrastructure projects. This may be a perceived as a short-term benefit but the tale of the tape will be found in the relative performance of equity markets.

The White House could be more conciliatory in response to China while increasing the tariffs on myriad EU products. Any Trump response could actually result in a lift to the EURO as the union attempts to lessen the trade tensions, especially if the EU embarks on the PROMISE of Fiscal Stimulus as desired by Mario Draghi in his farewell address.


Consider dividends on high-quality S&P equities that are higher than sovereign or corporate bond yields.

Consider gold in any currency, per the above background notes.

Be careful for expecting continued bullish moves higher on the U.S. dollar, per the above background notes. Consider the potential for a lift to the EURO.

Consider the potential for infrastructure-related equities should there be a move from monetary stimulus to fiscal stimulus.