Editor's note: The following analysis is from The Bear Traps Report, a weekly independent investment newsletter authored by Larry McDonald, focusing on global political and systemic risk. Below is an excerpt from his latest note.
— We're still in a late 2007 "sell the rallies" mode, a position that's been our friend over the last 22 months. It was December 26, 2014 [when] the S&P 500 touched a high of 2,092, [and] closed last Friday at 2,085. It's been one long pillow fight. Facing a media and Wall Street guaranteed Hillary Clinton victory, with high conviction, we believe any rally 2-3 percent will be short lived. At the end of the day, a Clinton White House brings a strong dollar relief run. Even worse, a potential short covering rise into a Fed rate hike attempt. The net result for markets? A move substantially lower for oil and rising credit risk. We've seen this show before back in December 2015.