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I recently joined the great Stuart Varney on Fox Business to discuss bond yields, the election, the Fed, the market outlook, misconceptions about the “Trump Trade,” and a lot more. Here are a few things to keep in mind about the iShares 20+ Year Treasury Bond ETF (TLT) and stocks.

Money is moving out of bonds. The last time we saw this abrupt of a move (two standard deviations) out of bonds in one month was 2001-2003. That preceded some of the biggest moves in history for US small caps and emerging markets equities.

Meanwhile, I told Stuart we have a tale of two cities in markets. Indices look a bit stretched in the short term, but many individual companies look like bargains. Markets SEEM to be pricing in “pro-business” policies coming to the White House (i.e. a Trump win). And if so, these newer themes will persist:

1. Un-Magnificent 493 will outperform Magnificent 7 (earnings growth accelerating for 493, decelerating for 7).
2. Small caps will outperform large caps by 11% in the first 12 months following the first rate cut.
3. Value will outperform growth in the first six months following the first cut.
4. Emerging markets will outperform developed markets as the US dollar continues to weaken.

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