Chart 3: EM debt and equity have been hit Chart 4: While Banks versus Staples has gone ballistic 950 40 0.43 ——=MSCIEM | _ 39 0.41 : 900 Wieder Tide EN Local Debt Fund ———S&P 500 Banks relative to Food & Bev (RHS) - 38 0.39 850 Ye 0.37 0.35 800 - 36 0.33 750 a 0.31 700 St 0.29 ; 38 0.27 650 32 0.25 2z=eeereeeee2e2 22 2 eB ee S2Seesee eee 2 © Sig sR Be S53 738 SSR eR ER 553233 Source: Bloomberg Source: Bloomberg The moves since Nov 8" have certainly been violent in certain asset classes. USD/JPY stands out, but the sell-off in US treasuries has been very marked, the hit to EM fixed income equally big, while in equity markets the outperformance of the Russell, the surge in the US banks and the sell-off in long duration equities has been remarkable. Some of these moves, such as stronger USD, higher yields, banks vs staples were extensions of moves that had already begun. Others, such as Russell vs S&P, JPY, Nikkei, were the start of new moves where 8 Nov marked a key turning point. The moves that had already started are now getting quite stretched with US 10Y yields up 5 standard deviations from the July low, with US Banks up by a similar amount vs Staples. The USD/JPY move though is more like a 2 SD move, with the NKY similar (if we exclude the 7% drop on US election day). Peak liquidity, deflation, Inequality and globalisation - watch for Peak Trump So what does a Trump presidency mean for the world? Michael Hartnett, our Chief Investment Strategist sums it up nicely with four of his seven peaks. Peak liquidity — the era of excess liquidity is over; Peak inequality — with fiscal stimulus to address inequality; Peak globalisation- free movement of trade, labour and capital ending, FX wars Starting; and Peak deflation — the secular low point in bond yields now behind us. We would add a peak to that which investors need to bear in mind —- Peak Trump. What we mean by that is at what point do the policy changes of the Trump presidency get fully discounted in markets. We h