Trading with point and figure

- Digesting Trump victory; remaining scheduled agenda mostly a distraction:
higher than expected China PPI, better than expected Japan services
survey precede UK Trade, rash of ECB speakers, NBP and RBNZ rate
decisions; US to sell 10-yr, Germany offers 2-yr

- After initial shock, pressure of sidelined cash should offer some
support for equities; EM story likely to be heavily differentiated,
Ukraine most vulnerable

..........................................................................

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** EVENTS PREVIEW **
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Life after the bitter US election starts here... apparently. The post mortem on the election will likely be protracted, and today's schedule of data and events are unlikely to be an enduring distraction, with China's inflation readings (PPI jumping mroe thane expected, CPI rising as expected) and the better than forecast Japan Economy Watchers' (services) survey to digest ahead of the ever erratic (but surely poor) UK Trade Balance along with Brazilian and Mexican consumer inflation readings, with US Wholesale Inventories likely to be purely of academic interest. ECB speak dominates the central bank schedule, with rates in Thailand and Poland seen on hold, and a 25 bps rate cut expected from New Zealand's RBNZ. Corporate earnings will remain plentiful, as Germany sells 2-yr Schatz and the US auctions a new 10-yr benchmark.

Today also marks the 27th anniversary of the fall of the Berlin Wall, Mr Trump's victory is a clear signal that the hope that accompanied it has been squandered by the world's political elite, and clearly hikes the stakes for Italy's referendum, and next year's elections in France and Germany. Much now depends on who are going to be the key members of Mr Trump's team, and what sort of working relationship there will be with Congress - all of that will take quite a lot of time to emerge, and in the meantime Obama is in charge until January 20. Market reaction has been largely unsurprising, with stocks and the Mexican Peso initially hammered, and govt bond markets well bid out to 10 years, but under a cloud at the long end. However as the dust settles around this 'risk event', and with so much money having been sidelined for a protracted period going into the election, there should be a good deal of support emerging for equity markets, as some money is put to work, but trading conditions will eminently remain choppy. The story for Emerging Markets will however be far more divergent, with the Ukraine looking to be among the most vulnerable. If equity markets do stabilize relatively swiftly, then markets will likely restore a higher probability to a December Fed rate hike, while the yield curve steepens in anticipation of higher spending (by extension issuance) under Mr Trump.


from Marc Ostwald
 
Ostwald saying that money should come back into stocks..been on sidelines for a bit of time..pending outcome
 
SPX over the last 24 hours

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The dollar is flat. Oil is flat; copper is up. Gold and silver are up. Bonds are down.
To the surprise of many Donald Trump will be the 45th president of the United States. The pollsters got it wrong. The media got it wrong. Everyone got it wrong. Even the GOP is surprised by how well Trump did.
As he was gaining momentum last night, futures tanked. At their worst level, the S&P was down over 100, triggering the circuit breakers, but now they’re only down about 30.
The Mexican Peso fell as much as 13% overnight – its biggest single-day drop ever.
Trump has been very critical of the Fed and low rates. Will he replace Yellen with a much more hawkish Fed chairman? The odds of a December rate hike dropped from near 80% to 50% in the last 12 hours. Financials are struggling this morning, including Goldman Sachs, which is down more than 8%.
Trump has also been very critical of Obamacare, which has gotten a lot of negative headlines recently for big price increases. Trump will attempt to trash the entire system. Health care stocks are doing well in premarket action.
Will the ECB sense instability in the market and economy and commit to further stimulus? We’ll see.
I stated yesterday the reaction to the election results could linger for a couple days…it wasn’t necessarily going to be a “gap and then focus attention elsewhere” situation. I still think this. S&P futures dropped 100 and then rallied back 70. We could get some similar moves the next couple days. Risk is still very high. I’d say use stops, but we could get some wide swings in both directions that take out stops and leave you with losses even if the market doesn’t change much.
Historically the market has rallied the last two months of an election year. Look at the Brexit move – huge back-to-back down moves followed by an equally impressive rally. Even if the market looks terrible today, be careful. It doesn’t have to fall apart. Expect the unexpected.
Enough rambling. See you on the Message Board. More after the open.
Stock headlines from barchart.com…
U.S. auto supplier stocks were all downgraded to ‘Underperform’ by Bank of America/Merrill Lynch, citing risks to trade, and NAFTA in particular, following the Trump win.
Constellation Brands (STZ +0.37%) slipped nearly 3% in pre-maket trading after the stock was downgraded to ‘Underperform’ at Bank of America/Merrill Lynch.
U.S. Steel (X +1.60%) was upgraded to ‘Buy’ from ‘Hold’ at Jeffries with a price target of $26.
Restaurant Brands International (QSR +0.72%) was rated a new ‘Buy’ at Veritas with a price target of $52.
TripAdvisor (TRIP -0.52%) slid over 12% in after-hours trading after it reported Q3 revenue of $421 million, below consensus of $436.6 million.
Hertz Global Holdings (HTZ -22.50%) gained nearly 1% in after-hours trading after Carl Icahn bought 15.1 million shares of the stock Tuesday and boosted his stake in the company to 33.77% from 15.6%.
Jazz Pharmaceuticals PLC (JAZZ -1.23%) fell over 3% in after-hours trading after it reported Q3 adjusted EPS of $2.57, below consensus of $2.61.
ViaSat (VSAT +0.63%) rose nearly 3% in after-hours trading after it reported Q2 adjusted EPS of 40 cents, higher than consensus of 34 cents.
Globus Medical (GMED -1.02%) slumped 10% in after-hours trading after it lowered guidance on 2016 sales to $560 million from a July 26 view of $575 million, and cut its 2017 sales view to $625 million from a prior view of $640 million.
Multi Packaging Solutions International Ltd. (MPSX -1.31%) dropped 8% in after-hours trading after it reported Q1 adjusted EPS of 17 cents, weaker than consensus of 24 cents and said it sees a “challenging” first half of 2017.
Points International Ltd. (PCOM +1.59%) was rated a new ‘Buy’ at B. Riley with a 12-month target price of $10.
SAExploration (SAEX -3.82%) surged over 20% in after-hours trading after it announced a new project award for seismic data acquisition services valued at $35 million for a 3D deep water ocean-bottom marine project in West Africa.
Today’s Economic Calendar
7:00 MBA Mortgage Applications
10:00 Wholesale Trade
10:30 EIA Petroleum Inventories
1:00 PM Results of $23B, 10-Year Note Auction
9:00 PM Fed’s Williams: Economic Outlook


from Jason Leavitt
 
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