The permabull narrative on Wall Street is that President-elect Donald Trump is loading up the big fiscal spending bazooka. The U.S. economy will finally accelerate once again. Inflation is going to pick up. We're skeptical. But we'll continue to measure and map the economic cycle like we always do.
One thing is clear. At least over the short-term, Trump is Making the Stock Market Great Again! Below is our 'Trump Tracker' to help investors assess the evolving market expectations of the Trump presidency.
Here are a few callouts (since November 8th):
- Industrials (XLI): +5.9%
- Financials (XLF): +11.3%
- Steel: +8.8%
- Aluminum: +16.7%
A lot of people obviously think Trump will be the catalyst for a U.S. economic resurgence. Case-in-point, market-based measures of inflation expectations (like 5-year breakevens, Fed 5-year forward and 5yr/5yr inflation swaps) and Wall Street consensus CPI (Consumer Price Index) estimates have also been picking up since the Trump win. (See below).
This brings us to economic growth. Wall Street expects 2.2% GDP growth in 2017. Here's our take via Hedgeye CEO Keith McCullough in today's Early Look:
"While the market is starting to price in that the low of #TheCycle is in, it’s harder to get there on the latest components of the economic cycle (employment and consumption)."
Stay Tuned for More from our Trump Tracker.
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