Two Gurus,but not quite the same hymn sheet....

FIRST OF ALL, A BIG REMINDER : By the time many of you read this, Donald Trump will have held his first major news conference (16.00 GMT) that in normal circumstances could be expected to give the world a more precise idea of his plans.This is a BIG deal ..... and should be much more revealing that anything he might say at or around his inauguration (coronation ?) on Jan 20th. From an economic standpoint, it will be fascinating to see if he says anything that would banish the growing suspicion among some that the 3% - 4% GDP growth he's aiming for might be unachievable. 

People will also want to judge how much of his campaign rhetoric will be translated into actual policy. Investors might be hoping that some of the more extreme views expressed by Mr Trump on the stump will not make the transition, since it now seems acceptable that there is little requirement for what is said in electioneering to bear much relation to fact. Well, we are in the Post-Truth era after all ..... it's a concept that Mr Trump seems to buy into and he probably secured the decision of Oxford Dictionaries to make it its Word of the Year 2016.

We'll see (maybe) ..... but looking at Mr Trump's selections for key government posts you'd have to say that there's little evidence so far of him wanting to pussyfoot around. Certainly, his input into the issue of car manufacturing in Mexico suggests that his stance on Trade is unlikely to be watered down to any degree. Mind you, it's hard to see how his protectionist position will marry with the target of up to 4% annual growth  --  perhaps the journalists will ask him today.

Actually, that may very well prove to be the most interesting part of today's proceedings  --  the possibility of Mr Trump getting into a lively Q & A session with the assembled media. They're bound to ask some questions that won't be entirely to Mr Trump's liking, you would think. Will he handle them with tact and restraint, or will he be ....... well, Trump-like ? We may get a chance to see whether this mould-breaking President-elect will attempt to avoid taking things personally and act in what up til now has been known as a presidential manner. Failure to do so would only deepen concerns about whether such a temperament is suited to the position of President and Commander-in-Chief , but that of course is an issue way beyond mere economics.

Two Gurus,but not quite the same hymn sheet....

ref :- "Treasuries risk shift to bearish zone" , The Financial Times, Markets and Investing

ref :- "Gundlach Says Treasuries Above 3% Would End Bull Market" , Bloomberg Markets

Two oracles of the bond market have hit the wires today (actually, last night) and both are essentially warning about the same thing though they differ somewhat about the details. There's no reason why such luminaries as Bill Gross of Janus (aka "the Bond King" and Jeffrey Gundlach of DoubleLine Capital should agree absolutely on any issue  --  this is not the same as a maths test with obvious binary answers. But of late they have been largely of the same view on bond markets and the fact that they can draw different conclusions when the stakes are so high gives us all hope.

Mr Gross believes that if the yield on 10-year US Treasury Bonds was to break upward through 2.60% (last at 2.39% and remember bond yields move inversely to prices), then we would be moving fundamentally into new territory for bond markets. We did in fact touch that level briefly in December during the recent sharp sell-off but now a break back up again would signify, chart-wise, a new long-term bear market. Since we talk about a 30-year long-term bull market in bonds, this would be big news indeed, and is a much bigger deal than record highs in stock markets, oil price moves or dollar / euro parity, for example.

Having said all that, Mr Gross does sound a little sceptical of President Trump achieving his desired minimum of the 3% growth that would really ignite inflationary fears and confirm a bear market for bonds. Mr Gundlach is a little bolder about what such a confirmation might presage for bond markets, although his key level is a little further away  --  a yield of 3% on the 10-year. Nevertheless, Mr Gundlach is pretty convinced that yields will at least have a look at 3.00% this year, and if they break higher then 6.00% by the end of Mr Trumps first term is on the cards  --  yes, that's 6.00%.

Both men have been bearish on bond markets for a while  --  one may not agree with them, but such is their standing that one needs to consider what they say. Presumably, they will be giving just as much attention to what Mr Trump comes out with this afternoon .... as of course we all will, right ?