By now you have already read a thousand articles about "What Donald Trump means for _____," and I'll try and avoid that sort of simplistic analysis — primarily, because that assumes certainty in even the beginning of the probability tree, which I don't think even the president-elect has just yet.

What I do feel comfortable in saying is that the general tendency of assumptions is toward a pro-growth model with lower taxes, less fiscal restraint (i.e., less concern about budget balancing) and higher levels of government-sponsored investment and defense spending. From a big-picture perspective, it will look a lot like a rotation from massive monetary stimulus to fiscal stimulus.

Fiscal stimulus is great in theory, and the multiplier effects of infrastructure spending are great, but as with many governmental programs' successes or failures, the devil is in the details. Multiple levels of governmental funding, approval and spending complicate efforts as state and municipal entities actually hold the majority of the say as to where the dollars get spent.

In any case, the market interpretation has been stronger dollar (re-patriation and trade act front-running), higher rates and higher domestic equities (largely from taking insurance hedges off). The dollar index has run into its now thrice-tested resistance at 100.0, and is unlikely to break through it for 13-year highs unless we see interest rates take the next leg up.

While there is plenty of uncertainty as to the details for the next administration, underlying inflation is continuing to pick up, and we have an FOMC that is at least theoretically comfortable with running a "high-pressure economy." We'll see if that proves true in practice.

Bull Case

• DXY headwinds at 100.0 likely to provide some respite for the strong-dollar induced selling in metals.
• Despite their 11 percent and 20 percent drops from peak levels this year, gold and silver are still up 15 percent and 22 percent year to date. This cuts both ways, but managers generally chase performance.
• Metals have held up well in the face of much higher moves in yields. U.S. 30-year now yields around 3 percent, and the 10-year about 2.25 percent.
• Perhaps expectations of further volatility in interest rates will keep cash on the sidelines or in assets like gold for the time being. The end of a 30-year bull market makes it hard to step in and catch the knife.
• Put skew is back! Equivalent puts are actually pricing to a premium over calls at most tenors. Traders are buying insurance against long positions in size not seen since January. That insulates downsides some.
• December gold, silver and palladium EFPs in backwardation are supportive of the spec market getting a little too short with their December positions mid-roll, but the February gold, for example, is still sufficiently rich, so the effect is moderated some.
• The SGE arb rose to double digits last night for the first time in memory. Asian physical demand is improving.
• U.S. physical demand among retail has been lackluster as of yet.
• Even when they hike rates by 25 bps in a month, they are going to try and put downward pressure on USD and the rate hike expectation curve. They want to get off zero, not drive the dollar through to 10-year-plus highs.

Bear Case

• The biggest driver of net global gold demand has been negative-yielding sovereign debt that gives locals a negative opportunity cost to own gold. The notional amount of said debt is down some 30 percent over the last month or so, which will likely hurt European demand in particular.
• Medium-term: Yields are going higher across the board currently, and a December rate hike is an 80-plus percent probability.
• ETF liquidation seems to be a consistent trend now.

Chart 1

This ain't 2008. Trump is inheriting a much stronger economy than his predecessor. While average hourly earnings (bold blue line) are just now climbing to 2.5 percent annualized, some earlier indicators like JOLTS job quits (gray) and initial jobless claims, adjusted for portion of workforce (red, lower) are both still signaling employment situations about as tight as peak levels.

It is entirely possible that the Fed ends up wanting to continue to run their dovish stance and not overstrengthen the dollar, only to have their hands tied by inflationary data. There is plenty of speculation about what a Trump presidency may mean for a Fed that will likely need four new appointees, including chair and vice-chair in the next few years.

Fed independence is an idea, not a law, and I'm not so sure Trump is above putting implicit or explicit pressure on them to do his whim.

Chart 2

Despite selloff, gold (white candles) is actually holding up well versus what I view as input prices. Note the huge move in U.S. 10-year rates (red, inverted axis), which basically gave back the entire year's prior move to get back to 2.25 percent.

The DXY (tan? peach? line) is still implying much lower gold, but some of the outperformance against USD alone can be attributed to the down but still massive amount of negative sovereign debt around the world, with most longs still sitting on nice gains for the year, especially denominated in local currency.

Coin Toss

Binary events like the election are often a paradigm shift in the pricing of risk assets. Leading up to last week, gold's correlations with currencies were running near all-time highs, and now we have seen that take a dive from 95 percent (JPY) to around 40 percent on a 10-day rolling basis. Some of that has allowed gold to actually outperform what you might otherwise expect on a correlation model basis.

We have held the $1,205-1,215 critical support area for now, and there is a big pocket of fresh Texas air between $1,200 and $1,100 should we break. On the whole, the immediate, most severe part of the rally in dollar, rates and equities is likely out of steam, so we should see dollar-denominated assets like metals get a chance for a breather/consolidation.

Busy economic week ahead, but the bias is for higher metals in relief.

The election is over, and now we can get back to civil discourse around Fed hikes, Italian referendum and the unwinding of the world's largest coordinated monetary experiment. Econ wonks and traders everywhere are breathing easier.