Wall Street really doesn't like Donald Trump.
Think about it. Data on Wall Street consensus positioning shows that investors have been betting against President Trump since his Election Day victory (even though U.S. economic data has been heating up).
Much to Wall Street's chagrin, and to the detriment of their P&L, broader U.S. stock indices are up between +10% and +13.2% since that fateful November 8th day.
And then stock market bears, finally, got some relief...
So far this week, U.S. stocks have fallen between -1.3% and -2.7%. Following the modest pullback, Wall Street celebrated "cracks" in the Trump trade. The sky-is-falling headlines came rolling in.
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Reuters: Wall Street sinks on fears of delays to Trump tax cuts
- WSJ: Stocks Suffer Worst Day of Year as Confidence in Trump’s Agenda Wavers
- Yahoo Finance: Wall Street set to open lower as 'Trump trade' fizzles
- CNBC: Trump Tantrum looms on Wall Street if health-care effort stalls
The Germans have a word for this type of thing. "Schadenfreude" is defined as pleasure derived by someone from another person's misfortune.
Betting Against Trump
All this hyperbole is actually pretty sad. Since Election Day, Wall Street has been betting on a big correction that hasn't come. Not to get too technical but the Chart of the Day below shows investors' wagering on a selloff in stocks.
(Specifically, it shows investor expectations of future volatility implied by options positioning in the S&P 500, Nasdaq and S&P 500 Technology sector.)
The big spikes in the chart show fearful investors piling in to buy downside protection. This has been the case since Election Day. In other words, politicized investors have been losing a lot of money on the other side of this rally.
Bottom Line
We would bet against fearful Wall Street consensus. As we've said, over and over again, U.S. economic growth is accelerating. It's simple. That will continue to send stocks higher.
Click here to get our investing ideas to help you beat this bull market.
