WASHINGTON, April 24, 2017 – Democrats aside, happy days are here again for Wall Street’s previously hibernating bulls. That’s because Round 1 of Sunday’s French Presidential election is over, and the May 7 finale will not pit a Communist candidate vs. an alleged extreme right winger.
Winners of Round 1 include “moderate” Emmanuel Macron, who, to this columnist at least, appears in most ways to be a pro-Eurozone centrist.
Macron’s opponent, as expected, is toned-down but still right-wing firebrand Marine Le Pen who vows to put together a “Frexit” from the EU as well as the euro, favoring Gaullist-style nationalism, a return to the French franc and a second Frexit, this time from active cooperation with NATO. Worse, Le Pen allegedly a right-winger, favors something of a marital separation from the Western alliance in favor of cuddling up with Russian President Vladimir Putin. Sound familiar?
French pollsters and pundits are already preparing for a YUGE Round 2 win by Macron. But how easily the Establishment seems to forget what happened to similar prognostications that breezily predicted landslide defeats for both the Brexit and the Presidential candidacy of Donald Trump.
In any event, as far as always short attention span traders and investors are concerned, it’s off to the races as the bulls attempt, at least short-term, to revive the nearly moribund Trump Rally in Monday trading action.
As of 3 p.m., an hour from Monday’s close, the Dow Jones Industrials are up a whopping 233.09 points, with the S&P 500 notching a 25.98 point gain and the tech-heavy NASDAQ was up an even more impressive 72.56 points. All three averages are currently ahead by roughly 1.25 percent.
There’s no guarantee that this bull move will have follow-through, and the big numbers being posted aren’t causing all boats to rise. While the “risk-on” trade has resumed, at least for the moment, many newly-bullish investors are raising cash for more aggressive buys by dumping bonds and bond proxies like utilities, REITs and MLPs.
Part of today’s positive action might also involve short-squeezes in various issues, as short sellers are fleeing certain previously-perceived risky sectors rather than lose a bucket of money should these stocks and sectors continue to rise on the basis of improved investor optimism.
It’s tough to reposition in today’s bullish environment, as chasing particularly huge gainers has a tendency to backfire on the smaller investor since such emotional gains often will not hold.
Also problematic: Oil continued to show weakness on Monday, with indications, once again, that the world is in a potentially price-crushing surplus of black gold, at least for now.
Nonetheless, after the grim, sideways-to-down grind of the last month or so, it’s nice to see the bulls indulging in rational exuberance once again, if only for a day.