Stocks were mixed as the Dow fell while the NASDAQ moved higher for a second day. The Dow closed down 54 points to 18,868 on lighter trading volume.
Bank of America Merrill Lynch does a regular survey of fund managers and prior to the election the survey revealed that managers favored cash and projected that US GDP growth would be flat with inflation a small risk. Today however the sentiment has been flipped on its head. Managers are now putting money to work as cash levels have fallen by 14% while the expectations for growth and inflation have moved to the top of the list. Managers also expect the yield curve to steepen significantly. The number of respondents expecting a steeper yield curve jumped from 31% to 65%. The odds of a December rate hike are now close to 100%.
WTI crude oil held mostly flat as an OPEC deal hope was offset by a surprise US stockpile build. The US Energy Information Administration said crude stocks rose by 5.3 million barrels in the latest weekly tally. On a more interesting note there was news of a huge oil find in the Wolfcamp formation of the Permian Basin in West Texas. US Geological Survey said the find is 20 billion barrels trapped in four layers of shale worth about $900 billion. This discovery is almost three times bigger than the Bakken play in North Dakota. WTI closed the day down 0.68% to $45.50 per barrel.
While the experts argue about what “The Donald” will do (good or bad) as president, one thing for sure is that shareholders of shipping companies have benefitted from the election. Greek and US shipping firms have skyrocketed since the election (200% or so!) on speculation that infrastructure spending will bring raw materials to the US via ships.