(In case you were wondering, that's Donald Trump's signature emblazoned across the bull above).
The Donald's largely unexpected Election Day victory delivered financial markets the jolt it needed to push U.S. stocks to all-time highs. We're now just shy. Is the #TrumpTrade over?
Many institutional investors think so. According to data from the CFTC, on futures and options contracts data, institutional investors are very short the S&P 500. To be exact, as you can see below in our Chart of the Day (from today's Early Look), they are as short today as they were in April of 2016.
Remember: Back then, it was just two months after the S&P 500 bottomed, a result of the Fed's pivot from hawkish (the December rate hike being the first in a decade) to dovish on deteriorating economic data. On the Fed's about-face, small cap stocks went from crashing (the Russell 2000 was down -24% from the July peak to the February lows) to a massive bull market run. The Russell 2000 is up 20.8% year-to-date.
Once again, we think, investors are too bearish when economic data favors the bulls.
Everything from Retail Sales to Industrial Production to Durable Goods reports are showing improvement. Meanwhile, measures of consumer, business and homebuilder confidence are hitting cycle highs. For the time being, Trump has convinced most of the country he can, in fact, "Make America Great Again. Let's call it, "Trumphoria."
What does it all mean for U.S. stocks?
In today's Early Look, Hedgeye CEO Keith McCullough writes:
"Looking at current consensus macro positioning (CFTC futures & options data), I’d bet that the current net SHORT position of -127,358 contracts in the SP500 Index burns off. And the bull will mature, no matter how many people missed making the pivot."
in other words ... The #TrumpTrade lives.
