President-elect Donald Trump rang the bell at the New York Stock Exchange this week, and it was reminiscent of the times when Ronald Reagan and George W. Bush went to the NYSE years ago.
The infamous Reagan quote, "We're going to turn the bull loose," immediately came to mind.
Considering that, it seems appropriate to talk about bulls today because of their positive correlation to economic growth.
Live cattle futures and bond yields have danced together for decades:
As you can see, cattle futures and bond yields are structurally similar but sometimes diverge from one another. In the lower pane, we've included the 200-day rolling correlation to highlight the past (and current) divergences in price.
The biggest problem with correlation analysis is that it doesn't tell us which direction the lines will likely go next.
However, the primary trends have been higher since the 2020 low, and the odds favor that the primary uptrends will eventually reassert themselves.
And we think that's currently underway, with live cattle futures closing this week at the highest price in history.
We've been anticipating this as the evidence of inflation re-emerging has been stacking up:
The soft commodities are out of control and making historic moves.
Today, we're outlining a company that creates specialized equipment to convert and control electrical power, essential for semiconductors, solar panels, medical devices, and more.
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