Story written by Victor Reklaitis at Marketwatch
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 “bond king” doesn’t always nail it. He predicted in mid-November that the 10-year Treasury yield TMUBMUSD10Y, +0.39%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, +0.02% , S&P 500 ESZ6, +0.02% and Nasdaq-100NQZ6, +0.08% are dipping, as the Dow DJIA, +1.55% eyes a small weekly gain after another record close yesterday. The S&P SPX, +1.32% and Nasdaq Composite COMP, +1.14% , on the other hand, are on track for weekly drops of roughly 1% and 3%, respectively.
The chart above shows how one key biotech ETF IBB, -0.14% 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, -0.38% CEO argued yesterday that Trump’s election won’t take the focus off high drug prices.
“Do you think you could have just had a decent message for white, working-class voters? How about, it’s Hillary Clinton, she doesn’t connect with people?” — Kellyanne Conway, Trump’s campaign manager.
Conway was firing back at Clinton communications director Jennifer Palmieri, who had accused the winning side of appealing to white supremacists. The screaming match, as The Daily Beast put it, was far from the calm conversation that a Harvard conference was aiming for.
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.
Fed. Gov. Daniel Tarulllo is due to speak around lunchtime.
Starbucks is set for a down day following news late yesterday that CEO Howard Schultz is stepping down yet again.
Ahead of the open, closeout retailer Big Lots posted a surprise drop in quarterly revenue, but raised its profit forecast for the year.
Ulta Salon looks on track for an up day after its better-than-expected earnings late yesterday.
Trump has tapped retired Marine Gen. James “Mad Dog” Mattis for secretary of defense. For secretary of state, he’s now reportedly considering Exxon Mobil CEO Rex Tillerson and the company’s former CEO Lee Raymond.
In overseas political news, French President François Hollande has decided to ’old off on running for re-election, piling on the election uncertainty dans l’Hexagone.
84% — The top 100 public companies now account for that share of the net income of American public firms, according a new Ohio State working paper that the Abnormal Returns blog highlighted.
The paper — titled “Is the American public corporation in trouble?” — features the above chart.
One cheery line from the paper: “Accounting statements are less informative about the performance and the value of firms, because firms increasingly invest in intangible assets that do not appear on their balance sheets.”
Posted by: The Trust Advisor