ATH & Beyond [Video]

The Day So Far

In the words of US President Trump in a tweet last night – “WOW”. Turn the clock back and it was just January 2017 when baseball caps were being passed around the NYSE floor for the DJIA breaking 20,000 for the first time ever. Fast forward to today and the question is now how quickly until we get to 24,000. To pin this all on Trump would be misleading but the rise since his appointment has been clear and as discussed with our traders this morning a potential short-term disruption to this pattern may well come from the appointment of the next Fed Chair if perceived hawks John Taylor or Kevin Warsh were to get the nod.

In the FX market, GBP has seen some moderate volatility upon the release of the latest wage data which exceeded median expectations but does not detract from the on-going divergence between the average hourly earnings of British workers in comparison to the highest inflation rate the country has seen since 2012. The economic data points of the last two days is a perfect reflection of the difficult decision that faces the BoE’s MPC in the coming weeks as they weigh up the risks associated with lifting interest rates for the first time in over 10-yrs.

The Day Ahead

Looking ahead this afternoon maybe interesting and several questions from the floor have come my way in regards to the outlook for equities and whether my neutral bias has flipped to become more bullish. Why I don’t disagree with my colleague Vasilis in that risk sentiment remains robust at the moment what has been a familiar theme in US stocks is the pursuit of chasing big handles when in close proximity. Now that 23,000 has been achieved I wonder whether intraday market participants might pause for breathe and take some profit off the table before the trend higher re-emerges. In summary then I would be a little cautious today specifically given the significance of levels achieved but medium to long-term this doesn’t detract from maintaining a long bias in US equities with half an eye on the Fed leadership race.

Finally in the crude market last night’s API data has had little sustained impact with the headline crude figure showing its biggest draw in 2-months but both gasoline and distillates were the opposite. As such be careful with today’s DoE release given the mixed nature of yesterday’s report.