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It was all about taxes on Friday as Marco Rubio said he would back the bill following a compromise on the child tax credit. And then later in the session, this:

  • CORKER SAYS HE WILL VOTE FOR TAX BILL

So that’s “Little Marco” and “Liddle Bob” on board. It looks increasingly like this deliberate plan to make the rich richer is going to be implemented under the guise of a “Middle Class miracle.” I hope you asked Santa for a corporate tax cut for Christmas.

And speaking of the rich getting richer, stocks rose for a fourth consecutive week with the Dow and the S&P closing at fresh record highs.

Stocks

Since the tech selloff on November 29:

ValueGrowth

On that point, consider the following from JPMorgan’s 2018 year-ahead preview:

We recommend investors OW Value, stay Neutral Growth and Momentum and UW Quality and Low Vol. We have been positive on Growth and Momentum Styles since early 2017 arguing that a maturing business cycle favors Growth over Value. Growth has outperformed Value by ~14% (long/short) YTD and it now appears significantly stretched based on relative valuations, its alignment with Momentum and the macro backdrop. We had also noted that Value will need a specific catalyst (i.e. Tax reform, reaccelerating growth, higher oil) to regain its leadership. Most of these catalysts now appear to be in place and leading us to recently advocate rotation to Value from Growth.

The dollar rose for a second day, buoyed by tax optimism and a steep decline in the pound. The two-day win streak comes on the heels of rough Wednesday when the greenback dove following on a CPI miss and the market’s dovish interpretation of the messaging around the Fed hike. Prior to that, the broad dollar had risen for seven consecutive sessions in its best run of the year:

DXY

Here’s an annotated chart:

Dollar

We got some bear flattening on Friday and with it, the 5s30s fell below 53bps for the first time since October 2007:

5s30s

2Y yields were up for a ninth consecutive week and 5Y yields up for sixth straight week. 5s30s flatter for a fifth.

Here’s a fun chart from JPM:

CurveJPM

First weekly gain in four for gold. The CFTC report out this afternoon shows money managers’ net position was the least bullish in 20 weeks through Tuesday.

Gold

The pound took it on the chin on Friday with traders citing commercial demand for EUR/GBP. This of course comes after the BoE’s cautious tone on Thursday and also amid what should count as decent news on the Brexit front (talks are set to transition to the next phase):

GBPUSD

The FX weakness helped the FTSE outperform in Europe on Friday. Here’s a snapshot of the week in European equities:

Europe

The euro was easy to explain this week:

EURUSD

The loonie tumbled on Friday as well, retracing yesterday’s Poloz-related gains: 

USDCAD

WTI was basically flat on the week coming off two consecutive weeks of losses as the Forties outage and the OPEC extension battle jitters about U.S. supplies and production. “There’s a fight in the market,” Gene McGillian, senior analyst at Tradition Energy in Stamford, said Friday.

Here’s how things shaped up in fantasy land in the first week of futures trading (don’t forget: CME up next):

Bitcoin

Random: “If I had wings I would fly, let me contemplate“… 

Wings

And finally: “all in”…

allin

[JPM]

 

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1 comment on “The Rich Get Richer.

  1. YEP, they certainly will and Vlad is smiling as the bots continue and our “Liar in Chief” just keeps …..well……. lying. America the land of the incorrigible.

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