Trump-Fed Market Momentum Will Eventually Wane
The bullish momentum in the US Dollar (UUP) and Russell-2000 Small-Caps (IWM) continues, while investors rush for the exits on longer-term Treasury bonds (TLT). The first group is overbought and the latter is clearly oversold. The stock market’s irrational exuberance with the results of the presidential election and the abandonment of bonds in anticipation of Federal Reserve rate hikes are what I call “Trump-Fed Momentum” (pun intended).
Let’s see what next week brings. In one of Trump’s biographies, one of his maxims is “never lose your momentum”. As much as I agree with him on this, I’m afraid it does not apply to the markets.
Concerning the Fed, it has little choice but to raise rates in order to maintain what credibility it still has. A number of its voting and non-voting members have been publicly jawboning the case for a rate increase. My guess, if forced to pick, is that this time they will bump up the Fed Funds target rate by 25 basis points, regardless of the color of any ensuing economic data.
(Please refer to ETF summary table below for performance analysis .)
ETF Performance Summary
| RS 1Yr | Exchange Traded Fund | Last | Chg | % Chg |
| Equities | ||||
| 100 | DJ-30 Industrials (DIA) | 188.46 | -0.31 | -0.16% |
| 97 | SP-500 (SPY) | 218.50 | -0.49 | -0.22% |
| 91 | Nasdaq-100 (QQQ) | 117.32 | -0.44 | -0.37% |
| 100 | Russell-2k (IWM) | 130.99 | 0.69 | 0.53% |
| 92 | EAFE (EFA) | 56.20 | -0.62 | -1.09% |
| 65 | Emerging Mkts (EEM) | 34.59 | -0.16 | -0.46% |
| 88 | Europe FTSE (VGK) | 45.60 | -0.47 | -1.02% |
| 67 | Latin America 40 (ILF) | 27.15 | -0.08 | -0.29% |
| 72 | Brazil (EWZ) | 32.59 | 0.21 | 0.65% |
| 24 | Japan (EWJ) | 49.39 | -0.75 | -1.50% |
| 76 | Pacific Ex-Japan (EPP) | 40.21 | -0.17 | -0.42% |
| 92 | FTSE China 25 (FXI) | 35.94 | -0.03 | -0.08% |
| 24 | VIX Short-Term Futures (VXX) | 29.06 | -0.17 | -0.58% |
| Major Equity Sectors | ||||
| 92 | Consumer Discretionary (XLY) | 81.20 | -0.25 | -0.31% |
| 36 | Consumer Staples (XLP) | 50.50 | -0.18 | -0.36% |
| 99 | Energy (XLE) | 71.13 | 0.29 | 0.41% |
| 12 | Financials (XLF) | 22.16 | 0.00 | 0.00% |
| 0 | Healthcare (XLV) | 69.70 | -0.75 | -1.06% |
| 100 | Industrials (XLI) | 61.30 | -0.02 | -0.03% |
| 91 | Materials (XLB) | 48.32 | -0.07 | -0.14% |
| 4 | Real Estate (XLRE) | 29.71 | 0.06 | 0.20% |
| 99 | Technology / Info (VGT) | 120.39 | -0.28 | -0.23% |
| 65 | Telecom (IYZ) | 31.30 | 0.24 | 0.77% |
| 3 | Utilities (XLU) | 46.29 | -0.14 | -0.30% |
| Bonds & Fixed Income | ||||
| 8 | 20+ Yr Treasury (TLT) | 120.85 | -0.35 | -0.29% |
| 14 | Aggregate Bond Fund (AGG) | 108.37 | -0.35 | -0.32% |
| 51 | Treasury Inflation Protection (TIP) | 113.32 | -0.17 | -0.15% |
| 94 | Investop Corp Bond (LQD) | 116.59 | -0.66 | -0.56% |
| 77 | High Yield Corp Bond (HYG) | 84.63 | 0.00 | 0.00% |
| 8 | Pimco Intermed Muni Bonds (MUNI) | 52.88 | 0.10 | 0.19% |
| 15 | High Yield Muni (HYD) | 29.74 | 0.34 | 1.16% |
| Currencies | ||||
| 98 | US Dollar Bullish (UUP) | 26.19 | 0.09 | 0.34% |
| 91 | Euro Trust (FXE) | 102.94 | -0.35 | -0.34% |
| 47 | Japanese Yen Trust (FXY) | 87.08 | -0.67 | -0.76% |
| Commodities | ||||
| 76 | DB Commodity Index (DBC) | 14.67 | 0.12 | 0.82% |
| 88 | Gold (GLD) | 115.15 | -1.02 | -0.88% |
| 45 | US Oil (USO) | 10.32 | 0.19 | 1.88% |
| Real Estate | ||||
| 39 | DJ Real Estate (IYR) | 73.68 | 0.22 | 0.30% |
| 92 | DJ Home Construction (ITB) | 27.45 | 0.11 | 0.40% |
| 84 | Residential Real Estate Index (REZ) | 58.48 | 0.02 | 0.03% |
Signing off @ Hillbent…
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