TradeTheNews.com Weekly Market Update: The Trump Bump
Fri, 11 Nov 2016 16:06 PM EST

Global markets opened the week trading in what best could be described as a cautiously optimistic state. The run up in the VIX last week suggested to many that investors had already aggressively put on protection heading into Tuesday's election, and the modest rebound in stocks on Monday and Tuesday had most attributing the stabilization in risk sentiment to the polls that still predicted a Hillary Clinton Administration/Washington gridlock outcome. By late Tuesday evening stock futures were plummeting as it became clear that all the polls were wrong and Donald Trump would be the next President of the United States. Dow futures dropped 800 points, the Mexican Peso and Asian stock markets cratered, and the Yen surged along with gold into early Wednesday morning on a wave of uncertainty.

As European markets opened on early Wednesday Trump offered up a victory speech that struck and generally healing and inclusive tone and stressed the importance his administration would place of fiscal stimulus in the form of infrastructure spending out of the gate. The markets took note and, along with the Republican sweep in both Houses of Congress, sentiment turned in a fashion almost as stunning as the election outcome itself. Equity futures turned up and Treasury prices plunged as a barrage of reflation trades took hold. By Wednesday's NYSE opening bell equity futures had recouped most of the overnight losses and the Dow futures finished the session up nearly 1000 points from the lows.

The narrative quickly snowballed; lower taxes, aggressive fiscal stimulus and a much friendlier regulatory environment will goose growth and along with it inflation. Rates continued to back up aggressively and the yield curve steepened to levels not seen in almost a year. Banks and financials surged along with all deep cyclical groups leveraged to infrastructure outlays. Pharmaceutical and biotech names jumped in classic relief rally. Hospitals sank on prospect of repealed and replaced Obamacare. Dividend focused bond proxy groups lagged as rates moved up. Large cap technology also notably underperformed, mainly on concerns around immigration and trade, and the notion that the aforementioned out-of-favor sectors are better places to invest following the change in leadership. By Thursday, the DJIA closed at a new record high above 18,873, and for the week the DJIA gained 5.4%, the S&P500 rose 3.8%, and the Nasdaq jumped 3.8%. Energy futures did not participate in the risk-on surge -- crude futures slid as Iran's oil minister showed no urgency for reaching a production accord, saying the November 30th OPEC meeting is not a deadline for any deal.

Earnings seasons wound down with a few more notable names reporting. Retailers Macy's and Nordstrom announced solid quarterly results and selectively raised guidance. Hertz shares collapsed after a disastrous earnings report, but paired losses sharply as Carl Icahn announced he had doubled his stake in the car rental firm.

SUN 11/6
(US) FBI Director Comey: Review of Hillary Clinton's emails has NOT changed the original conclusion that she should not face criminal charges - press
HSBA.UK: Reports Q3 Adj pretax $5.59B v $5.29Be; Rev $9.5B v $15.1B y/y; Adj Rev $12.8B v $12.5B y/y

MON 11/7
(CN) CHINA OCT FOREIGN RESERVES: $3.121T V $3.133TE (lowest level since Dec 2011, 4th straight decline, and largest decline since Jan)
(EU) EURO ZONE NOV SENTIX INVESTOR CONFIDENCE: 13.1 V 8.6E
(US) Oct Labor Market Conditions Index Change: +0.7 v -2.2 prior
HTZ: Reports Q3 $1.58 v $2.81e, R$2.54B v $2.57Be
(CN) CHINA OCT TRADE BALANCE (USD): $49.1B V $52.3BE

TUES 11/8
ACA.FR: Reports Q3 Net €1.86B v €1.81Be; Rev €3.74B v €3.95Be
DPW.DE: Reports Q3 Net €618M v €49M y/y, EBIT €755M v €746Me, Rev €13.9B v €14.0Be
TM: Reports H1 Net ¥946B v ¥1.26T y/y, Op Profit ¥1.12T v ¥1.58T y/y, Rev ¥13.1T v ¥14.1T y/y; to buy back 1.3% shares for ¥200B
MT.NL: Reports Q3 Net profit $680M v loss $711M y/y, EBITDA $1.90B v $1.95Be, Rev $14.5B v $15.0Be
(IR) Iran Oil Min Zanganeh: Not pessimistic about the OPEC deal; Nov 30th is not a deadline for a deal
(UK) SEPT MANUFACTURING PRODUCTION M/M: 0.6% V 0.4%E; Y/Y: +0.2% V -0.1%E
(UK) SEPT INDUSTRIAL PRODUCTION M/M: -0.4% V 0.0%E; Y/Y: 0.3% V 0.8%E
VRX: Reports Q3 $1.55 v $1.78e, R$2.48B v $2.49Be
CVS: Reports Q3 $1.64 v $1.57e, R$44.6B v $45.3Be
(CN) CHINA OCT CPI M/M: 0.7% V 0.7% PRIOR; Y/Y: 2.1% V 2.1%E
(CN) CHINA OCT PPI Y/Y: 1.2% V 1.0%E; 2nd straight increase; highest since Dec 2011

WEDS 11/9
CARLB.DK: Reports Q3 Rev DKK17.5B v DKK18.0Be
BRBY.UK: Reports H1 Adj pretax £146M v £145Me, Pretax £102M v £155M y/y, Rev £1.16B v £1.18B prelim
(US) DONALD TRUMP PROJECTED TO BE THE WINNER OF US PRESIDENTIAL RACE; serve as the 45th President
Risk aversion off its worst level as President-elect Trump take a conciliatory tone in victory speech
(US) Atlanta Fed GDPNow: maintains Q4 GDP forecast at 3.1%, unchanged from Nov 4th
(NZ) NEW ZEALAND CENTRAL BANK (RBNZ) CUTS OFFICIAL CASH RATE BY 25BPS TO 1.75% (record low)); AS EXPECTED

THURS 11/10
SIE.DE: Reports Q4 Net profit €1.18B v €1.00B y/y, Industrial Business profit €2.45B v €2.41Be, Rev €22.0B v €22.4Be; Plans public listing of Health care business;
DTE.DE: Reports Q3 Adj Net €1.04B v €1.11Be; Adj EBITDA €5.54B v €5.56Be, Rev €18.1B v €18.1Be
AZN.UK: Reports Q3 Core EPS $1.32 v $0.98e, Rev $5.70B v $5.95Be; Affirms FY16
(FR) FRANCE SEPT INDUSTRIAL PRODUCTION M/M: -1.1% V -0.3%E; Y/Y: -1.1% V +0.4%E
(FR) FRANCE SEPT MANUFACTURING PRODUCTION M/M: -1.1% V -0.1%E; Y/Y: -0.9% V +0.4%E
(PH) PHILIPPINES CENTRAL BANK (BSP) LEAVES OVERNIGHT BORROWING RATE UNCHANGED AT 3.00%, AS EXPECTED
M: Reports Q3 $0.17 v $0.40e, R$5.63B v $5.63Be
(US) INITIAL JOBLESS CLAIMS: 254K V 260KE; CONTINUING CLAIMS: 2.04M V 2.03ME
JWN: Reports Q3 $0.84 adj v $0.52e, R$3.54B v $3.49Be
DIS: Reports Q4 $1.10 v $1.15e, R$13.1B v $13.5Be
(PE) PERU CENTRAL BANK (BCRP) LEAVES REFERENCE RATE UNCHANGED AT 4.25%; AS EXPECTED
(KR) BANK OF KOREA (BOK) LEAVES INTEREST RATE UNCHANGED AT 1.25%; AS EXPECTED

FRI 11/11
(US) NOV PRELIMINARY MICHIGAN CONFIDENCE: 91.6 V 87.9E (highest since June)