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Here Is What's Fueling the Stock Market's Epic Trump Trade - bull make amer

Love him or hate him, the epic #TrumpTrade continues to thrust increasingly confident U.S. markets to new highs. Since his historic Election Day victory, President-elect Donald Trump is making "Financial Returns Great Again." Take a look at performance since November 8th:

  • S&P 500: +6.0%
  • Nasdaq: +5.4%
  • Russell 2000: +16.4%
  • 10-year Treasury yield: went from 1.857% to 2.49% today

Digging a little deeper into the S&P 500:

  • Financials (XLF) were up another +4.9% last week, taking their year-to-date gain to +22.7%
  • Tech (XLF) was up +4.2% last week, taking its year-to-date gain to +13.6%

"It's worth noting that 100% of the year-to-date return for the Financials has come in Q4 of 2016, writes Hedgeye CEO Keith McCullough in today's Early Look. "Whereas only 13% of Tech’s has."

In other words, Trump has dramatically shifted investor expectations. People are more confident about the economic future. As you can see in today’s Chart of The Day below, both US Consumer and Business Confidence readings have gone rather green since October:

  • The University of Michigan’s Consumer Sentiment index popped to 98.0 in early December vs. 93.8 in November.
  • The Conference Board’s November Consumer Confidence reading of 107.1 was +8.6% higher than the October reading of 98.6. That’s a new cycle and year-to-date high

in other strong u.s. economic data news:

  • Durable Goods: The headline number was up a big time (+4.8% sequentially) and up +2.1% year-over-year.
  • Retail Sales: the retail sales “control group” (a good proxy for what goes into GDP) came in at +4.2% quarter-over-quarter growth rate (data released three weeks ago).
  • ISM Services for the month of November hit a 14-month high accelerating +2.4 points to 57.2. (The way this index is constructed, anything over 50 is expansionary.) Within the release, Business Activity ramped to 61.7 and Employment popped to 58.2. 

Bottom Line: An increasingly confident U.S. economy is accelerating. The #TrumpTrade is alive and well. 

Here Is What's Fueling the Stock Market's Epic Trump Trade - 12.12.16 EL Chart  2