With The Dow At An All-Time High, Citi Unveils HUGE, Ultra-Bullish Bet On America
And rather than make people nervous, it seems to be sucking in even more bulls, creating even more optimism.
In a new note out this evening, Citi macro strategist Jeremy Hale unveils a series of new trades, several of which can be characterized as: GO AMERICA.
Here are some of the big ones, with our summary of his rationale in bullets:
Sell US Treasuries
- This is simple. Because Citi has an optimistic take on the US economy, interest rates are likely to rise, slamming Treasuries.
- It's not impossible that we could see another 1994-style bond selloff/yield spike.
Long the dollar vs. G10 currencies
- US economic outperformance is now associated with a strong dollar. The dollar will do well against a basket of currencies, which includes the Swiss Franc, the British Pound, the Japanese Yen, and the Norwegian Kroner.
- Fed may turn less accommodative this year, which will help further.
Go long US equities vs. corporate credit
- Companies are starting to lever up and take actions that are pro shareholder (dividends, buybacks, etc.)
- Equity markets are still just generally cheap.
There's no doubt that the bulls are on parade.
This comes after Morgan Stanley's big call about an "inflection point" for the US economy.
Heck, even Richard Russell is a bull.
There's a feeling that (and this is especially so after today's retail sales report) that the US economy is bulletproof, the Fed isn't going to screw it up, and things won't be too bad in Washington, beyond what everyone expected. Risk on.