Dancing

Whilst it may yet to have been seen down Gresham Street, the ‘Trump Dance‘ has gone viral. The NFL have called it ‘fair game’. It’s been spotted in the Concacaf league, the UFC and, perhaps bizarrely, by an English player on the LPGA tour. Strange times. With fist pumping and wide eyes, it depicts somewhat, the famed ‘animal spirits’. Such spirits are loose. Loose in the end zone, loose in financial markets. Tails are up. The fizz and pop of a Republican sweep has seen flows, massive flows, into US funds. Some $56bn in the dust-settling week post the vote. That taps off seven consecutive months of inflows, the longest since 2021. A frenzy in crypto has left Dogecoin – a coin that appears to be backed by absolutely nothing – with a market cap bigger than Ford Motor Company. Ford may have an EV strategy a little loose in the wheel nuts, but still, it’s hard not to go “hmm”. Hence strategists at BAML calling the current mood “dangerously bullish”. Those pumping dollars into the market may yet look back in time and think, maybe buying the most expensive market in history was a bit hot in the thighs. That said, a market can stay expensive for some time, more so when the underlying economy is chugging over in what appears to be fairly good order. Tax cuts are coming, employment is described as ‘full’, and wages are up. There’s no obvious sign of a pin to make it all go pop. And yet, as some analysts point out, the make up of the post election brouhaha, offers a steer, perhaps, on where the long-term winners lie. Defensives are catching a bid, bar healthcare which has wilted under the nomination of the up-for-it health secretary. Cyclicals – bar energy – are also lagging, given a protectionist agenda is not uber-bullish for world growth. Growth too, more broadly, is also off the pace. It speaks of the winners being in the belly of the S&P, those companies exposed to the domestic market. The US of A. The small and mid caps. The lost tribe. Given the tsunami of capital that has flowed into funds that just buy the wider market over the recent decade, those nimble active managers, those with an eye for price and valuation – those still in business – may yet be doing a Trump dance of their own. Gresham Street awaits.