Close Your Eyes and Buy

By Heisenberg

It was another absolutely crazy day on the political front in the U.S. and you know what that means: record high stock prices! 

And to let Trump tell it, we’re headed inexorably higher if you’ll just let him cut taxes for himself for middle America:

Strocks

Wall Street shook off some of the craziest shenanigans yet out of Trump’s Twitter feed and also ignored the rather glaring discrepancy between what the Fed seems to be saying about inflation and the fact they are sticking to the near-term rate path (i.e. that would seem to suggest they are concerned about bubbles and financial stability even if they aren’t going to admit it). The Russell underperformed again.

Yields and the dollar dipped on the mixed message sent by Fed minutes. Earlier in the session, yields fell after Evans told reporters that it’s too soon to decide on a December rate hike:

DollarYields

December odds were steady after the minutes, hanging in there ~75%.

The euro was bid again, on relief in Spain and as the dollar was under modest pressure:

EURUSD

The rollercoaster continues for Spanish equities, which rebounded on Wednesday in line with what counts as a more “conciliatory” atmosphere between Madrid and Catalonia, although “conciliatory” is an extremely relative term there.

“Puigdemont has a five-day deadline to clarify if he declared independence,” Rajoy told parliament Wednesday. After that, he’s got “until 10am on Oct. 19 to rectify situation,” Rajoy added. Draw your own conclusions there.

IBEX

Oil was up a third day after OPEC lifted its demand forecasts for this year and although WTI is solidly above $50, it’s the same old dynamic. “A lot below $50 and producers do produce a lot less, but conversely, much over $55, there is going to be a lot of extra production. We’re range-bound, but it’s $50-$55 and not $45- $50,” Jay Hatfield, a portfolio manager at the InfraCap MLP exchange-traded fund, remarked.

WTI

Japanese stocks are of course riding high, sitting at their highest levels in over a decade as economic optimism and ultra-accommodative policy support ahead of this month’s snap election:

JapanNikkei

Oh, and South Korean shares tacked on another 1% today and have now left “fire and fury” in the rearview:

Kospi

Ultimately, there’s only one question worth asking: what happens when the flow dries up?…

CB

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