Markets buyin’ what Trump is sellin’

Markets are buyin’ what Trump is sellin’. The USD marched higher:

Commodity currencies were mixed:

Gold was hit:

Brent is stalled:

Base metals rebounded on China data and Trump:

Big miners too:

And EM stocks:

But high yield was flogged:

As US bonds sold:

European spreads closed:

And US stocks partied like it’s 1999:

I’ll offer three reasons. Although short of detail, the Trump speech was presidential and moderate versus other proclamations. He has shown that he will try to do what he says he will do. And, it promised, again, everything that will inflate the US economy – less labour, less corporate taxes, less middle class taxes, affordable health care for working classes and infrastructure spending. With confidence and the oil recovery already tearing it up, he only has to deliver moderately on these and the economy will power on.

On that front, data was also supportive as the ISM tore it up as expected (charts from CR):

The February PMI® registered 57.7 percent, an increase of 1.7 percentage points from the January reading of 56 percent. The New Orders Index registered 65.1 percent, an increase of 4.7 percentage points from the January reading of 60.4 percent. The Production Index registered 62.9 percent, 1.5 percentage points higher than the January reading of 61.4 percent. The Employment Index registered 54.2 percent, a decrease of 1.9 percentage points from the January reading of 56.1 percent. Inventories of raw materials registered 51.5 percent, an increase of 3 percentage points from the January reading of 48.5 percent. The Prices Index registered 68 percent in February, a decrease of 1 percentage point from the January reading of 69 percent, indicating higher raw materials prices for the 12th consecutive month. Comments from the panel largely indicate strong sales and demand, and reflect a positive view of business conditions with a watchful eye on commodities and the potential for inflation.

And income was good:

Personal income increased $63.0 billion (0.4 percent) in January according to estimates released today by the Bureau of Economic Analysis … personal consumption expenditures (PCE) increased $22.2 billion (0.2 percent).

Real PCE decreased 0.3 percent. The PCE price index increased 0.4 percent. Excluding food and energy, the PCE price index increased 0.3 percent.

GDPNow fell back to 1.8% but that’s a problem for another day with the Trump agenda in full swing:

MB allocations are unchanged:

• buy the dips in USD and S&P500;
• buy the dips in short end Aussie bonds;
• sell rallies in commodities and the AUD;
• buy the dips in gold miners;
• sell property.