Velocityshares Daily 2X Vix Medium Term (TVIZ)

[gldtimer]

Amazing Reversal Day!

At one point in the overnight the SP was down 5%, with LB up 1%. So how did the day end SP up over 1% and LB down 4+%.

So what did it?

Answer: The republican controlled the Senate, now having total control of the executive and both houses!

Get ready for GOP populism, which means higher growth and higher inflation...for a sovereign long bond holder (zeros got destroyed today down 6%) this is like being bitten by a cottonmouth on one ankle and a rattlesnake on the other.

Now there is just one long term problem for stocks. As sellers cash in the LB and buy equities, the equities bubble against the bond and then go kapooie!

Stocks will then have a Wiley Coyote moment and crash (dividends increase) to catch up with the higher bond yields.

There's an old adage: The stock market will only do what the bond market lets it. In a relative valuation framework stocks should have fallen right along with the LB...but of course that didn't happen.