What a crazy week it has been for the markets. It turns out we were living in opposite land and did not know it. What was projected to happen in the election did not happen and what was projected to happen in markets if Trump won did not happen. This could well be one of the greatest examples of “analysts were surprised”. At the close on Friday the Dow was up 39 to 18,847 on lighter Veterans Day trading. For the week the Dow gained 5.2% to an all-time high. IBD has markets in a rally but caution is advised.
Nordstrom’s reported earnings that surprised the gurus by posting a 6% revenue gain and a 47% jump in net profits. Shares were higher as results handily beat estimates. Same store sales were up 2.4% while at the Rack segment same store sales were up 4%.
Emerging market fund flows reversed post-election as money left EM debt and equity positions like doves flying away from a statue in Rome. Reasons for the capital flight was concerns over Trump’s “America first” trade policy coupled with spiking US interest rates which mean you don’t have to travel outside the US to find yield. Speaking of US Treasury rates, yields on the 10 year jumped by the most since 2009 as the prospects for stimulus and growth with maybe even some inflation took a big step into the limelight. Yields on the 10 year had been at 1.79% on November 4th but as of yesterday they stand at 2.13%. This signals that investors are expecting higher interest rates in December when the Fed meets.
Gold continued to pull back falling $41 an ounce to a 5 month low of $1,225. It seems rising interest rates and a strong dollar are affecting gold prices. WTI crude oil was also down 3.2% to $43.22 a barrel as global supplies appear robust.