Gartman On Post-Trump: Sell Bonds, Buy Infrastructure & Stocks

November 09, 2016

Mr. Trump is a builder, and builders build. So as an investor, you go out and find the simple things. I don’t think this fella is particularly interested or adept at high-tech or big pharma; he’s going to use simple things to build buildings, roads and bridges. If you keep it that simple, you’re probably going to do OK. (related ETF: iShares Global Infrastructure ETF (IGF))

In general, I think Mr. Trump made it abundantly clear that he’s going to invest in infrastructure. In fact, as I’m writing in my newsletter tomorrow, I think he’s going to out-Keynes Keynes.

Hougan: Out-Keynes Keynes. You mean he’s going to spend big. Who’s the loser in that, short term and long term?

Gartman: The losers are very conservative, fiscally conscious Republicans.

There is an old-line of thinking: “Only Nixon could go to China.” In other words, you had to be a hard right-wing conservative to open up Communist China; it was the only way people would accept it. The same phenomenon could happen here: Only a quasi-Republican could throw over the bounds of fiscal austerity and say, “let’s spend money.”

Watch what happens: Trump’s going to embrace Bernie Sanders. It will stun everyone, but that’s what’s going to happen. Sanders will get on board; Democrats will get on board; most moderate and liberal Republicans will have no choice but to get on board.

Honestly, he’s going to out-Keynes Keynes. And the loser, when that happens—to answer your question—is the bond market.

Hougan: Is that why we’re seeing the 20-year Treasury taking it on the chin today? What should investors do with their portfolio?

Gartman: If you own bonds, you’re going to have a hard time in the next year. The peak was made in the bond market weeks ago. Now you’re going the other way, and it could be years of a bear market in bonds.

Can the country survive with a 5% yield on the 10-year note? Of course it can. But it will be bad for the bond market. Of course, there are ETFs that will take care of that fact if you want, with the inverse products like the TBT (ProShares UltraShort Lehman 20+ Year Treasury ETF).


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