Trump Has Got the Moves Like Jagger

When it comes to President Trump and the stock market, it is definitely style over substance. It was not what he said Tuesday night, it was how he said it, and the Trump supporters, to paraphrase the Rolling Stones, can't always get what they want, but they got what they needed. The stock market, which seems to be how this president gauges success, loved the topics, but it seemed to have total disregard for how we are going to pay for it. I think the market rally today caught a lot of investors flat-footed, and as we are not any closer to tax or regulatory reform, today may put the rally closer to the ninth inning than most bulls seem willing to admit. The dollar has risen on the back of the pro-growth agenda speech, combined with the hawkish speech of the Fed's William Dudley, which has put a bit of pressure on the precious-metals sector. The March Fed meeting is definitely live ahead of Chair Janet Yellen's speech on Friday. Gold, which traded down to $1,237 (near important $1,234 support) this morning is back up to $1,247 on outsized volume. There seems to be more portfolio insurance/tail risk hedging by hedge funds as gold is holding up relatively well. The last time the USD/JPY was 115 (presently 114), gold was $1,160, so in relative terms holding quite well. Obviously, there is enough money around to have protection against the inevitable disappointment in The Donald's march to a 4% growth target. At the same time, silver is outpacing gold as part of the reflation trade and platinum has narrowed its discount to gold to $220. The Trump speech combined with better import and export numbers in China have helped base metals rally. CTA flows combined with Chinese speculative flows have all been on the buy side to start the month, so copper, zinc and aluminum have all benefited. Aluminum has traded up to $1,950 a ton on rumors that China's National Development and Reform Commission has issued an order to curb smelter production in Henan, Shandong and Shanxi provinces during heating season. This edict was first mentioned in January but it seems it is getting more traction today as these provinces account for 36% of the smelter capacity and 50% of alumina refinery output in China. This has helped Alcoa's stock jump more than 10%, reversing a recent downtrend. Auto sales seem to be better than expected with February SAAR coming in at a 17.5 million pace, which should help ali as well, especially given Ford's light truck numbers. Copper is recovering as well as Freeport McMoRan continues to have difficulty getting production back on track in its stalled negotiations with the Indonesian government. Oil equities are rallying with the broader market despite the underlying price maintaining its narrow trading range between $52 and $54. The inventories continue to build with both the American Petroleum Institute (+2.5) and the Energy Information Administration (+1.3) showing smaller-than-expected builds, but Cushing, Okla., also building 500,000 barrels. Vols continue to trend lower on the tight underlying range. Saudis continue to cut output, putting OPEC compliance at 94%, but I would expect to see big jumps in U.S., Canadian and Brazilian production over the next few months. Rumors of an executive order to change the national biofuel program are just that, and the onus still falls on refiners to combine biofuels and gasoline.

Trump Has Got the Moves Like Jagger

Market's reaction to his speech could be likened to a Rolling Stones lyric.

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