The stocks that could soar if the market keeps rising - The stocks that could soar if the market keeps rising

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The stocks that could soar if the market keeps rising

The stocks that could soar if the market keeps rising

"The stocks that could soar if the market keeps rising" 

so The stocks that could soar if the market keeps rising . What to watch..... See below. 

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Some market watchers expect semiconductor stocks to continue their rise, but others are urging advise investors to wait for a dip.

They went up more than 4 percent for the second-straight week — the first time they had done so in more than two years.

Semiconductors are considered cyclical stocks, meaning they rise as the market rallies and drop as it dips, due to their use in so many electronic devices. Yet beyond the general updraft in stocks, there may be another reason why they've been rising recently.

The stocks that could soar if the market keeps rising

Some say that under a Donald Trump administration, loosening of regulation may lead to revved-up merger and acquisition activity.

"The industry is looking for further consolidation, and the current structure of regulation didn't allow all that consolidation to occur this year"   cnbc

Consolidation in the semiconductor space has surged over the last 10 years, according to a report earlier this year by consulting firm McKinsey. The total number of deals completed in 2015 reached 23, for a total value of $4.3 billion; that compares to the 11 in 2005, for a total deal value of $300 million.

The S&P Semiconductors Select Industry is up 25 percent year to date. One of the biggest semiconductors, California-based Nvidia, has surged 183 percent this year alone. And Qualcomm is up 35 percent year to date.

Yet its probably not something to chase

The hope is that the next administration is going to allow some consolidation to occur, and hence this group works. But we think it's probably overbought right here; we'd wait for a pullback before getting in.


Consolidation will continue,  which  could boost semi stocks. Maybe buying the chipmakers over any other group within technology at this point, and recommends buying an ETF in the space for general exposure.


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Here's what to expect from the Trump trade in the week ahead

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Here's what to expect from the Trump trade in the week ahead

Here's what to expect from the Trump trade in the week ahead

"Here's what to expect from the Trump trade in the week ahead" 

so Here's what to expect from the Trump trade in the week ahead . What to watch..... See below. 

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The higher yields and stronger dollar of the Trump trade should continue to dominate markets in the week ahead.

At the same time, with stocks near all-time highs, traders are watching to see if gains fade in some of the more bubbly sectors of the stock market. The four-day Thanksgiving trading week does have some economic data, including existing home sales Tuesday, and new home sales and durable goods on Wednesday.

Plus the fact that There is more money starting to pour into the financial sectors. So right now that is a sector we are going to have to watch further. Here is the chart....

Markets have been recalibrating with money moving out of bonds and into stocks since the surprise election win by Donald Trump. The dollar index has risen 3 percent to a 14-year high, and Treasury yields, which move inversely to price, are at the highs of the year.

The president-elect's promise to cut taxes and launch a giant fiscal spending package has spurred expectations that growth will pick up, pushing up inflation and leading to higher interest rates.

Small caps have ridden the wave, setting new highs in the past week, but the broader market did not, with the S&P 500 ending the week at 2,181, up 0.8 percent but 9 points below its record close. The small cap Russell 2000 was the star performer, up 2.5 percent for the week at a record 1315. The Russell is now up 10 percent since the election and has been up 11 days in a row for the first time since 2003. cnbc

We could meander more than we press new highs, because I think we're going to see unwinding of some of the stretched trades," There has been an 11 percent gain in the S&P financial sector and the 5 percent jump in industrials since the election. The S&P 500 is up 2 percent in the same time frame.

If more bulls enter the market, there is a situation where the S&P could reach 2,350 in 2017, and 2,500 by 2018, before the bull market ends.

If the S&P is going to get over 2,200 real soon, it would need a catalyst, inauguration the fact that the incoming Trump administration has put corporate tax cuts at the top of its agenda is a major positive. That could be just the ticket needed. Time will tell. 

Every five points of the structural tax rates reduction would boost profits in the S&P 500 by about 4 percent," Trump proposes a 15 percent tax rate from the current 35 percent, but even a 25 percent rate would be a big plus. Domestic industries would benefit more than those with a lot of overseas profits.


The Trump transition in markets comes as economic data was beginning to look better. "The economic data is important and the Fed is only talking about raising rates two times next year, and  bond yields may be moving too quickly. He said the move in the dollar makes more sense, and its potential impact on multinational earnings has not yet started to worry the stock market. 

The 10-year Treasury yield pushed higher in the past week, trading at 2.35 percent late Friday.

10-year yield is at an important balancing point. It is at a level – 2.30 to 2.35 - that it was at late last year when the markets believed the economy was improving and the Fed was going to hike rates four times in 2016. But weakness in China, Brexit and other factors intervened, and the Fed now is only on track to hike once this year, in December.

If you believe there has been a fundamental shift in the markets with a Trump presidency, which means it's going to be more about business investment, capex … then yields should be higher, north of 2.75 percent. If you believe we're still in secular stagnation mode, then yields are going to be lower.

one negative would be if Trump begins to take steps to change trade accords that would spark retaliatory action from trade partners. that's the wild card," 

We may be getting way ahead of ourselves. There is one thing we can't measure, and that is animal spirits. If animal spirits are rising and confidence is moving higher, that could be surprising, yields could go higher than expected more quickly.

The thing with balancing points is they're inherently unstable. We're not going to stay here for long. We're either going higher in this shared optimistic world, or we're going to flip around say nothing is going to to work — we're back to stagflation,

Oil is another factor to watch in the week ahead. West Texas Intermediate crude futures ended the past week 5.3 percent higher at $45.69 per barrel, amid speculation OPEC and other producers will strike a deal on production.


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Equity fund flows surge as bond and EM funds bleed in the week following Trump’s victory

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Equity fund flows surge as bond and EM funds bleed in the week following Trump’s victory

Equity fund flows surge as bond and EM funds bleed in the week following Trump’s victory

"Equity fund flows surge as bond and EM funds bleed in the week following Trump’s victory" 

so Equity fund flows surge as bond and EM funds bleed in the week following Trump’s victory? Why is this happening..... See below. 

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Money poured into global equity funds as investors yanked allocations from global fixed income and emerging market strategies in the week following Donald Trump's victory in the U.S. election, according to data from financial intelligence firm EPFR Global.

As global equity funds pulled in over $27 billion for the week ended November 16, global bond funds lost two-thirds of that amount, making it the second largest weekly outflow since the data provider began to track the asset class's flows in the first quarter of 2002. Money market funds lost a further $14 billion for the week.

The key themes picked up by investors heading into a Trump presidency were clearly reflected in flows as U.S. equity investments were concentrated towards financial, healthcare and industrial sectors.

These speak to the widespread belief that the President-elect will seek to boost fiscal spend, cut red tape and encourage interest rates to resume an upward trajectory.

Within the report, EPFR Global Director of Research, Cameron Brandt said, "This week's flows are certainly consistent with the narrative that Trump's policies spell reflation in the US and a lighter regulatory burden for a number of sectors."

"They are also consistent with the assumption the benefits of a hotter U.S. economy will not flow as smoothly through trade channels to other countries and regions," he added.

President of Mexico Enrique Pena Nieto walks along US Republican presidential candidate Donald Trump after a meeting at Los Pinos on August 31, 2016 in Mexico City, Mexico.

President of Mexico Enrique Pena Nieto walks along US Republican presidential candidate Donald Trump after a meeting at Los Pinos on August 31, 2016 in Mexico City, Mexico.

Such regions include emerging markets whose hard and local currency funds saw the largest cash outflows on record and the highest as a percentage of assets under management (AUM) since the so-called "taper tantrum" during the second quarter of 2013.

Two emerging markets bucking the trend were Mexico and Russia.

Despite Trump's threats of building a wall between the U.S. and Mexico to stem north-bound migration and of watering down NAFTA (the U.S. free trade agreement with Mexico and Canada), Mexican equity funds pulled in more than $250 million for the second week in a row. This as the market was perceived as oversold with anticipation growing that spillover from any boost to the U.S. economy from a Trump presidency could offset newly erected trade barriers.

Flows into Russian equity funds bounced to an 87-week high as optimism over the future of the relationship between the world's largest country and the U.S. rebounded given Trump's open attitude towards Russian President Putin during and since the Presidential campaign.

Have a look at the RUSSIA stock market below. Its holding pretty strong, and well here. Quite interesting!!!

This as Russia's economy appears to be turning a corner; business confidence in the country is growing and expectations are rising that the European Union (EU) might not be able to maintain a united front on punitive sanctions.

While high-yield bond flows suffered $3 billion of redemptions and municipal bond funds recorded their biggest outflows in over three years, floating rate and inflation protected bond products attracted strong inflows. Bank Loan funds rebounded while inflation-protected bond funds secured an additional $500 million for the sixth time in the past seven weeks to add one more week to their longest straight run of inflows since the first half of 2011.

Equity sectors going against the overall grain were real estate and consumer goods, the former expected to be hit by the anticipated rise in interest rates and the latter by expectations for more subdued wage growth than under a Hillary Clinton presidency.

The exuberance seen in equity markets was reflected in a survey carried out by alternative assets data provider Preqin following the election, in which 53 percent of managers said they believed the new administration would be positive for hedge funds and private capital funds.

They pointed to bumps from expectations for increased fiscal spend and cuts to corporation tax as key reasons for their optimism although they broadly viewed dilution of free trade treaties as a potential negative.

Only 12 percent of the 182 alternative asset managers surveyed expect Trump's presidency to have a negative effect on the industry.

We have our overall outlook for pending 2017 period in the coming newsletter

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