Greg Blotnick – What traders are watching 11/28/2016 – per JonesTrading
TRUMP TRADES– Donald Trump’s economic plans received strong backing[ft.com] from the Organization for Economic Co-operation and Development on Monday, with the international organization predicting the president elect’s infrastructure planswould increase US growth, combat inequality and energize discouraged workers.
Boosting spending on infrastructure and improving education could relieve some of the burden on the US central bank to support the economy – Stanley Fischer, vice-chairman of the Federal Reserve Board, said[ft.com] well-targeted fiscal policies could lift America’s economic potential. About $500bn had gushed from equity funds and into bonds this year but last week the flows reversed[ft.com], with investors yanking more than $18bn from fixed-income vehicles and pouring $27.5bn into stocks, according to EPFR Global
Industrial metals also remained red hot on hopes of strong demand for property and infrastructure investment in China and the United States – Chinese steel futures jumped over 6 percent, while iron ore futures also gained about six percent and zinc, used to galvanize steel, powered[reuters.com] to a nine-year high on the London Metal Exchange – China’s top economic planner today approved[bloomberg.com] a 247 billion-yuan ($36 billion) railway plan to link Beijing to neighboring cities as part of a government effort to improve connectivity around the nation’s capital.
We need to look at month-end rebalancing. Getting chatter $17-$27B of equities for SALE and Bonds to BUY by rebalancers. “Largest since Oct 2015” says the Goldman. Spoos + 5% MTD, TLT down almost 8% MTD
On Friday, investors turn their attention[ft.com] to the US for an update on the health of the country’s labour market. The US economy is expected to have created 175,000 jobs in November, from 161,000 the previous month. Economists expect the unemployment rate remained unchanged at 4.9 per cent, while average hourly earnings grew just 0.2 per cent in November, from the previous month, when they climbed 0.4 per cent.
MOONSHOT– Small company shares on Friday notch their longest winning streak in 20 years[blogs.wsj.com] on a shortened Black Friday trading session. The Russell 2000 Index rose 0.4% in in the shortened session to book its 15th advance in row. This streak ties a run last seen in February 1996. The longest ever streak, 21, was hit back in 1988. Investors are betting that President-elect Donald Trump will relax regulations, lower taxes and pump money into infrastructure projects. Such policies should benefit small caps more than there larger brethren.