Monday, December 5, 2016

Rally Trump continue unstoppable

Rally Trump continue unstoppable.

The 'Trump Rally' remains firm and with fuel to keep rising (SPX today at + 1%), as there are no signs of weakness indicating otherwise. The 350 stocks in all-time highs on the NYSE say it all. Much of this 'second air' of the rally on Wall Street is owed to Europe and the strength that the banking sector has shown there that intuits that tomorrow Draghi and the ECB will dictate measures that will favor their markets: prolongation of the QE stimulus program and no tapering. It seems that 2016 will end with its usual Christmas hikes.

Important fact to keep in mind: this 2016 the Value Stocks (the fearful) outperformed the Growth (the optimists), after almost 3 years, breaking resistance, since the election of Trump.

Europe: next week ECB meeting

Europe again in sight as the ECB meeting approaches next week. Already I commented on the postponement this month of the decision to apply the tapering (reduction of the QE, the stimulus of buying debt). It is understood that if it is given (I see it difficult given the political-economic environment in the Eurozone today), European stock markets would fall sharply, probably pulling Wall Street. In addition to the Bloomberg survey attached thereto, today Goldman-Sachs GS in a report indicated that this is unlikely to occur, which helped increases in all eurozone exchanges.

All this coincides with what happened in Italy with the resignation of Renzi in the wake of his defeat in the referendum. The Italian stock market continues to rise from yesterday, against all forecasts, driven today by the rise of the banking sector at European level: Deutsche Bank DB 10%, Credit Suisse 7%, Barclays 5.6%, Santander 5.5%, HSBC 4.6%, supplemented for the news that the Italian government is going to rescue the emblematic bank Monte del Paichi, the oldest bank in the world, in danger of disappearing. However, what has been known later is that much of the magnitude of this rise has been due to investors covering their shares of banks to the downside, or short squeeze, in the idea of ​​a probable rise in the coming weeks. Attentive these days to Draghi and his friends, who can move the markets soon.

According to this Bloomberg survey, economists 
do not believe a tapering in Europe until mid-2017.


JP Morgan JPM recommended today, for the first time since 2014, to lower the duration of the bonds in the face of a strong rise in inflation (effect dubbed 'Trumpflation'), in addition to the aggressive sell-off of bonds since Trump's triumph . Lowering duration implies having a bias towards bonds with shorter maturities, which, as mentioned in a previous post, are less sensitive to inflation. As a result, the yields of the Treasury Bonds (30 years) and Notes (20 years) TYX and TNX, fell sharply at noon. I think that after a slight pullback by this news, these yields should continue their rise, because the bond bubble has already been growing very dangerously these years, and its correction I still see it incomplete.

The Treasure Notes today at 2.39% comes strong with the 'Trumpflation', 
and with a way to go, because it seems to beat the multi-year trendline shown.

More about the "pot stocks"

The cannabis stocks are being hit and strong after Trump's victory. Already the day before the election commented on how interesting this item could be with several promising penny stocks such as Terra Tech TRTC or Canopy Growth TWMJF, especially if Hillary won. And although the ballotage gave the victory to the legalization of marijuana in 8 of the 9 states that voted, the falls in the prices of the majority of their companies are being of the order of 30-40%. The reasons may be: technical correction after an impressive rise in 2016, or fear of Trump's anti-drug policy naming Jeff Sessions as attorney general, recognized opponent of the herb. We will see in these days how the panorama moves to decide a trade in this "new" subsector.

Yesterday's TRTC chart struggling to beat the trendline, which did not happen today (-17%). It remains to wait for definitions in the topic 'legal cannabis' from the Trump environment to wait for a recovery.

Good behavior of the Copper /HG

The commodity with the best post-Trump behavior has been copper /HG. This fact is directly related to his plan to rebuild the country's infrastructure: copper is one of the main materials used in construction, the basis of all electrical installations, in addition to uses in telecommunications. With its rise of more than 20% has broken a resistance that came from 2014 at $2.2 and points to the next resistance at $3. At present, China's consumer statistics are expected to strengthen its rise, although a slight correction can be expected for the profit-taking of investors and traders. Since I do not trade futures, I use JJC, the etf that follows copper with acceptable daily transactions. On my radar.