Weekly Market Outlook | 09.12.2016

Stocks rally “Yuge”.

Equity markets are running white-hot on expectations of a near miracle from the President elect Trumps administration. Speculation that the Trump fiscal stimulus and tax abatements plan would trigger US and global economic acceleration sent global stock markets to new all-time highs. Even a failed referendum and resignation of Prime Minister Renzi, prospect of a financial sector meltdown in Italy, Trump-China twitter war or ECB stealth tightening could not dent the animal spirits. Interesting, “irrational exuberance” a term coined by then Fed Chair Greenspan celebrated its 20 year anniversary on the 5th. USD strength continues as investors rotated out of Emerging market and low yielding currencies. The ECB provided a slight of hand by beginning tighten yet providing enough dovish language to convince the market it had not. The RBA held rates steady as was widely expected. Finally economic data from China suggests that 2017 could see a reversal in the structural slowdown in growth.