Peruzzi’s Perch – Jan 26 2017- Forget About Fed Policy and Rates- Equities Markets Are All About Trump Tweets (Still?!)
U.S. equity markets close the week in record territory, as the Dow Jones finally crosses the 20,000 Maginot line on Wednesday. Fueled by business friendly policy and rhetoric out of Washington, relatively inexpensive energy, improving corporate earnings and low rates the Dow recorded 2nd fastest 1,000-point move in history (42 days). What was a FED/rate driven market, which was preceded by the Oil driven market, has been replaced by a Presidential policy/tweet-driven market.
This week we saw rallies in cement and steel stocks when President Trump signaled he was forging on with his boarder wall as well as rallies in energy stocks when the Keystone and Dakota XL pipelines were reopened. Across the border Mexican stocks even lost 1.4% on Thursday after Mexican President Enrique Peña Nieto canceled a scheduled meeting at the White House. Fed watching has been replaced by Tweet watching and so far, the equity markets like what it is seeing. Historically when markets cross into record territory we normally see a brief pause while analyst access valuations. Additional positive news was received after the close on Thursday as earning from Microsoft, Intel and Alphabet beat estimates. As of Thursday 161 of the S&P 500 names have reported with 120 (74.5%) reporting a positive surprise and 38 (23.6%) reporting a negative surprise.
Next week 24 S&P 500 companies are scheduled to report earnings. The reporting firms are dominated by retailers. It will also be an important week economically with Dallas Fed activity on Monday, Chicago Purchasing managers on Tuesday, a FOMC rate decision on Wednesday (no change expected), productivity and labor cost on Wednesday and the ever important January employment report closing out the week on Friday. The FED Funds rate, despite Chairwoman Yellen calls for increased magnitudes of rate increases, is not expected to change. Fed funds are only pricing a 14.5% probability of a rate hike for Wednesday’s FOMC meeting. Friday’s employment reported should see a lot of attention. A positive report is sure to be met by the suddenly customary round of tweets and promotion. It may however be a tad bit early to put much emphasis on the report. The April, May and June reports should be much better harbinger of the effectiveness of the Trump agenda toward job creation. With the Dow Jones now over the 20,000 level, after 6 failed attempts in December and January, we will be looking for signals on the strength and sustainability of the bullish sentiment. There are some concerns over Trump’s protectionism and the recent decline in the U.S dollar has made some foreign investors nervous. Global markets are in rally mode but with European referendums this spring, trade agreements being rewritten and rising political tension there is uneasiness about it.
Asian Markets are expected to be quite as the Lunar New Year holiday commences Friday. Chinese markets will remain closed until next Friday. 2017 is the year of the Rooster. The Rooster is almost the epitome of fidelity and punctuality. Investors would be well served by being loyal to facts and details on their trades and in being punctual, as we have entered a market environment never seen before.
Managing Director International Trading
Mischler Financial Group
Investment Banking | Institutional Brokerage
Larry Peruzzi is a 20 yr global trading markets veteran and brings a unique perspective to global equities market commentary via Mischler Financial Group, the securities industry’s oldest minority broker-dealer owned and operated by service-disabled veterans. Larry’s experience and best execution perspective stems from his sitting on ‘both sides of the aisle.’ For more than half of Larry’s career, he ran buy-side trading desks for Standish Mellon and thereafter, The Boston Company. In both of those roles, Larry was responsible for implementing and managing international equities trade execution. Larry’s perspectives are frequently cited by the leading financial news publishers, including The Wall Street Journal, Bloomberg LP and Reuters
Mischler End of Week Equities Market Commentary via Peruzzi’s Perch January 26 end-of-week edition is distributed via email to institutional investment managers and Fortune Treasury clients of veteran-owned broker-dealer Mischler Financial Group, the investment industry’s oldest and largest minority broker-dealer owned and operated by Service-Disabled Veterans.
Peruzzi’s Perch is a weekly synopsis of Everything Equities as seen from the perch of Mischler Financial Group’s International Equities Desk. Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, Peruzzi’s Perch is one of four distinctive content pieces produced by Mischler Financial Group.
To receive Peruzzi’s Perch, please contact Larry Peruzzi, Managing Director, International Equities via email: firstname.lastname@example.org or via phone.
Peruzzi’s Perch via Mischler Financial Group Jan 26 2017 Global Equities Market Commentary: Trump’s Tweet-Driven Policy Approach Propels Stock Prices; Can This Continue?
News and Information Categories
- Mischler Muni Market Outlook: Municipal Bond Offerings Scheduled Week of April 24 04/24/2017
- Week’s IG Corporate Bond Issuance: Cooling Off Period; April Showers Bring May Flowers 04/22/2017
- FIG Funding 5.0- Mother Merrill Launches a MOAB (Mother of All Bonds) 04/20/2017
- FIGs 4.0; Investment Grade New Issue Re-Cap- Mischler Debt Market Comment 04/19/2017
- Mischler Muni Market Outlook-Pending Municipal Debt Offerings Scheduled This Week 04/17/2017
- Risk Appetites Sour as News Cycle Confounds, But US Equity Markets Remain Stable; Mischler Commentary 04/07/2017