Post by Deleted on Dec 2, 2016 14:12:22 GMT
Today’s jobs report isn’t looking like it can prevent a rate hike. That means investors are closing out the week with more head-scratching about the “Trump trade.”
The big question is whether it’s back into the cage for those animal spirits unleashed by The Donald’s election win. Maybe the wild rumpus is just getting started, suggests Josh Brown.
“If this sort of thing extends beyond the speculators in the stock market into the actual C-suites where spending and investment decisions are made, then it becomes self-fulfilling and it could actually work,” Brown writes over at his Reformed Broker blog. “If it doesn’t, well then at least we’ll have some fun in the meantime.”
Count Jeff Gundlach among those arguing that the party is over. He provides our call of the day.
“The dollar is going to go down, yields have peaked and will move sideways, stocks have peaked as well, and gold is going to go up in the short term,” the DoubleLine Capital CEO says in an interview with Reuters. “It is so late to be buying the Trump trade.”
Gundlach, who voted for Trump and predicted the GOP nominee would win, says people are expecting too much, after earlier being too gloomy.
“People were expecting markets will go down 80 percent and global depression — and now this guy is the Wizard of Oz,” the star manager says, adding that “there’s no magic here.”
Gundlach is known for savvy calls, but the “bondking” doesn’t always nail it. He predicted in mid-November that the 10-year Treasury yield TMUBMUSD10Y, -1.40% would not move above 2.35%, but it has hovered around 2.45% this week.
Staying on the topic of the president-elect’s effect on markets, our chart of the day shows how one of the friskiest Trump trades just lost 75% of its post-election gain.
Key market gauges
Futures for the Dow YMZ6, -0.10% , S&P 500 ESZ6, -0.16% and Nasdaq-100 NQZ6, -0.22% are dipping, as the Dow DJIA, +0.36% eyes a small weekly gain after another record close yesterday. The S&P SPX, -0.35% and Nasdaq Composite COMP, -1.36% , on the other hand, are on track for weekly drops of roughly 1% and 3%, respectively.
Oil prices CLF7, -0.45% are giving up a little bit of their OPEC-fueled gains, while Europe SXXP, -0.87% is significantly lower as investors worry about Italy’s referendum on Sunday. See the Market Snapshot column for the latest action.
Traders here and there are pointing out the “Trump rally” has faded for biotech stocks XBI, -0.49% .
The chart above shows how one key biotech ETF IBB, -0.18% has knifed below its 200-day moving average, a level that it had been living above since the day after Election Day. This ETF was up 12% from its Nov. 8 close as of mid-November, but it’s up just 3% as of Thursday’s close.
This can’t be helping: Allergan’s AGN, -0.19% CEO argued yesterday that Trump’s election won’t take the focus off high drug prices. (See his surprisingly readable blog post here.)
Read more: Why health-care stocks won’t get well soon
Not that every Trump trade is unraveling. Financial stocks XLF, -0.74% , for example, are still looking strong and finding buyers, Instinet’s Frank Cappelleri notes.
The economy
The November report for nonfarm payrolls said the U.S. economy added 178,000 jobs last month as the unemployment rate fell 4.6%. The Fed looks all but certain to raise interest rates later this month, according to MarketWatch’s story.
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The big question is whether it’s back into the cage for those animal spirits unleashed by The Donald’s election win. Maybe the wild rumpus is just getting started, suggests Josh Brown.
“If this sort of thing extends beyond the speculators in the stock market into the actual C-suites where spending and investment decisions are made, then it becomes self-fulfilling and it could actually work,” Brown writes over at his Reformed Broker blog. “If it doesn’t, well then at least we’ll have some fun in the meantime.”
Count Jeff Gundlach among those arguing that the party is over. He provides our call of the day.
“The dollar is going to go down, yields have peaked and will move sideways, stocks have peaked as well, and gold is going to go up in the short term,” the DoubleLine Capital CEO says in an interview with Reuters. “It is so late to be buying the Trump trade.”
Gundlach, who voted for Trump and predicted the GOP nominee would win, says people are expecting too much, after earlier being too gloomy.
“People were expecting markets will go down 80 percent and global depression — and now this guy is the Wizard of Oz,” the star manager says, adding that “there’s no magic here.”
Gundlach is known for savvy calls, but the “bondking” doesn’t always nail it. He predicted in mid-November that the 10-year Treasury yield TMUBMUSD10Y, -1.40% would not move above 2.35%, but it has hovered around 2.45% this week.
Staying on the topic of the president-elect’s effect on markets, our chart of the day shows how one of the friskiest Trump trades just lost 75% of its post-election gain.
Key market gauges
Futures for the Dow YMZ6, -0.10% , S&P 500 ESZ6, -0.16% and Nasdaq-100 NQZ6, -0.22% are dipping, as the Dow DJIA, +0.36% eyes a small weekly gain after another record close yesterday. The S&P SPX, -0.35% and Nasdaq Composite COMP, -1.36% , on the other hand, are on track for weekly drops of roughly 1% and 3%, respectively.
Oil prices CLF7, -0.45% are giving up a little bit of their OPEC-fueled gains, while Europe SXXP, -0.87% is significantly lower as investors worry about Italy’s referendum on Sunday. See the Market Snapshot column for the latest action.
Traders here and there are pointing out the “Trump rally” has faded for biotech stocks XBI, -0.49% .
The chart above shows how one key biotech ETF IBB, -0.18% has knifed below its 200-day moving average, a level that it had been living above since the day after Election Day. This ETF was up 12% from its Nov. 8 close as of mid-November, but it’s up just 3% as of Thursday’s close.
This can’t be helping: Allergan’s AGN, -0.19% CEO argued yesterday that Trump’s election won’t take the focus off high drug prices. (See his surprisingly readable blog post here.)
Read more: Why health-care stocks won’t get well soon
Not that every Trump trade is unraveling. Financial stocks XLF, -0.74% , for example, are still looking strong and finding buyers, Instinet’s Frank Cappelleri notes.
The economy
The November report for nonfarm payrolls said the U.S. economy added 178,000 jobs last month as the unemployment rate fell 4.6%. The Fed looks all but certain to raise interest rates later this month, according to MarketWatch’s story.
-----------------------------------------------------
C L