Trump in a lolly shop

CBOE volatility has fallen 24% over the past week.

Chicago
Source: Bloomberg

Another night of approvals for the coming Trumponomics, with all of the US indices that count pushing into, or very close to, record territory overnight. The Russell 2000, which is the real representative end of any planned Trump tax cuts, now looks very comfortable over the important 1300 - at 1321 points. Dow transports again higher, and there were solid 43 point gains in the Nasdaq Composite.

This comes on the back of a surprising 24% drop in the CBOE VIX over the past week. With upcoming elections in France and the still unknown Trump full transition team, markets are starting to consolidate the recent gains. Lack of profit taking would suggest a further bullish outcome.

In the theme of getting the band back together, Trump moves to build his cabinet and meets with Rick Perry, the ex-Governor of Texas and ex presidential republican candidate. Also on board is Newt Gringrich taking on an advisory role looking at Government reform.

On the broader markets theme, the emerging markets MSCI moves to rally 0.3% higher. This is surprising considering the USD Index (DXY) looks very comfortable over the 100 level at 101.12. Mexico, the pawn in the whole Trump campaign, lowered its GDP forecast into 2017.

Russia makes supportive statements for a cap on oil with crude up 3.8% and having a strong push back to the important $50.00lb. This three-week high price recovery comes into the already recovering energy space and is expected to continue. It’s showing up in Santos and Woodside, with both stocks entering a primary bullish price pattern. Woodside is testing $30 resistance and is looking the most bullish after trading in a basing pattern for most of the year.

On the commodities theme, iron ore has given up most of its recent gains, falling another 3.37% last night. Coking coal was the standout commodity at 4.1% higher for the overnight session.

Further gains in copper of 2% and gold higher by $4 will see some nice flowthroughs to the mining space. OZL and BHP are expected to continue moving higher after recent price consolidations.

For our markets today, the futures suggest a very solid 34-point gain on the open, giving an opening call of 5385 on the Aussie 200.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.