The Future Belongs to Optimists

Equities start the day higher as Trump-o-Mania continues to ripple thru stock markets. Look, I need to apologize, I’ve spent the entire week at Baird’s fabulous Industrial Conference in the great city of Chicago so I couldn’t be here to regale you with inane commentary about a crazy election. Our conference though…I mean… it’s amazing. Tremendous. Terrific. We don’t even need to make conferences great again because our team puts on a heck of a show. Clients, Companies, Baird employees, Senior managers, it’s all tremendous. If I can manage to write this entire recap in Trump-speak I’ll be very, very, very happy with myself. So if you’ve been following me thru the years you know I don’t talk about politics. There’s ZERO good that can come out of it so I leave it to pundits and people who like making other people angry. Seriously, when you talk politics here are your two potential outcomes: 1) you preach to the choir or 2) you p*ss someone off. THAT’S IT. NO OTHER OUTCOMES. So I avoid it. If you want daily political commentary hit up Google. Anyway, Donald J Trump will be our next President and you know what? Life goes on. If Clinton won I’d feel the same way. Why? Because America is a vibrant, electric, industrious nation. We have a strong rule of law, incredible innovation, hardworking citizens, and the world’s largest economic engine. Trump, Clinton, Obama, Bush, take your pick but you know what? We push forward, we thrive, we do our best to take care of our family and our friends. You know what changed here at Baird after the election? Nothing. My fantastic, amazing, tremendous, very, very, very intelligent coworkers went on providing clients with the best service possible. PWM group? Awesome. Research? Top notch. Sales and Trading? World Class. Banking? Exemplary (they know WACC inside and out, trust me). Senior Managers? Unparalled (it’s nearly bonus time). Elections come and go, Democrats and Republicans come and go, Economic cycles come and go, do me a favor and approach the future with optimism not with despair. Bob Iger expanded Fantasyland in the absolute depths of the financial crisis. As the world crumbled around him he put in another Dumbo ride for crying out loud. The future belongs to optimists, join us here at Baird being one. 

After the open it was nothing but tremendous rotation. I mean the best rotation you’ve ever seen, we NEED this rotation I’m telling you. Financials act like they just invented the checking account. Utilities act like they send poisonous gas into your bedroom. Industrials act like WW2 just ended. Staples act like Oreos kill cats. Literally everything has been upended and the market is aflutter with activity. It just blows my mind how fast things have changed since Tuesday night. One event steepened the yield curve faster than the world’s most powerful central bank EVER could. Nearly all of the big shot macro wonks are bulled up now talking about GDP surges and shovel ready. I’m telling you… “Fiscal Stimulus” is the new “lower for longer” when it comes to price action. It’s like the market just got a triple shot espresso after it finished a Red Bull. I’m excited my friends… can you tell? Opportunity abounds, don’t sit on the sidelines right now. Ok you already know the winners and losers, no need to rehash that plot point. What about tech though? The Nasdaq fell sharply this morning…what’s up there? Well, it’s more of that rotate into the “Trump sectors” we just spoke about. Tech has been the only place to get Alpha this year so it is incredibly over owned. You know what’s under owned? That’s right Johnny, Financials. Here is a chart where I normalized SPX, QQQ, and XLF to the open on Tuesday. Banks take off, SPX glides higher, and Tech starts to get hit. This one might have legs we’ll have to see. Anyway, by lunch SPX was up 34bps, Nasdaq was down 68bps, and Trump was on TV with Obama. 2016… I mean what can you say about this year? Oh yea… CUBS WIN. CUBS WIN.

The rest of the day brought nothing new to our Trumped up stock market and we closed at 2,167, up 0.2%. So the question is this: does the market continue its massive internal upheaval or is this all just a giant “hope” trade? Hard one to answer my friends, I guess I’m 50/50 on whether it continues or not. If Trump or any of his advisors came out and told us that infrastructure spending was #1 or 2 on their list then yea, it will continue. If we don’t hear anything for a while then the market will be prone to reverting back to its old defensive mode. So I guess it all depends on what Trump says… and we better get used to hearing that for the next 4 years am I right? Let me end by saying I love you all, whether you live in America or Europe or Asia or the Middle East or Australia or Mars or whatever this is all one great big goat rodeo, embrace your fellow man or woman and let’s get to work towards securing a bright future for our kids and their kids and thank God I won’t be alive for that because I never wanna change another diaper in my life. Can I get an amen? AMEN. Final Score:  Dow +118bps, S&P500 +20bps, Nasdaq -81ps, Rus2k +157bps. 10yr yield 2.14!!! Wow.

Volume was off the charts. Our desk was WAY better to buy. Buying in Financials and Financials and Industrials. Selling in Consumer and Tech. Shorting in index ETFs. News Highlights:

It’s been a long week… we’re skipping to the big finish.

Tonight we have a bunch of fun loving Frenchman who don’t care about the election. All they care about is surfing over a 5000 foot ravine. Yikes.

Have a good night.