One theme that comes up in almost every conversation one cares to have about markets these days is whether and to what extent the “Trump trade” has been unwound or otherwise faded.
Indeed, the idea of the “Trump trade” has become so ubiquitous that it’s taken on an increasingly amorphous character (as things that become ubiquitous tend to do).
That is, what the fuck is a “Trump trade,” really?
We used to know. It was “reflation.” It was a steeper curve or, more generally, rising yields. It was financials outperforming. It was a stronger dollar. It was high tax rate companies benefiting from expected tax reform. It was small-caps (you know “make America great again” and all).
But over time, it’s come to mean pretty much anything anyone wants it to mean and ultimately, the “Trump trade” now proxies for “the stock rally” even as a quick look under the hood (i.e. below the benchmark level) reveals that most of the trades we all associated with Trump were faded long ago.
Well anyway, BofAML is out with a pretty handy chart on Thursday which takes a look across asset classes with an aim to illustrating where post-election min-max moves have been unwound completely, partially, or not at all.
See if you can spot what’s still hanging on for dear life at record highs/tights despite lackluster incoming data and central bank tightening…
