zerohedge.com / by Tyler Durden / Nov 28, 2016 8:37 AM
That the stock market move surprised traders in the aftermath of the just as surprising Trump election victory has been extensively described both here and elsewhere: the dramatic surge in the S&P to new all time highs, pushing the index above 2,200 last week for the first time ever on hopes of a $1 trillion fiscal stimulus has been duly noted. However, perhaps just as surprising is that as JPM finds, very few investor types managed to successfully profit from the so-called Trump trade.
As Nikolaos Panigirtzoglou writes in his latest weekly Flows and Liquidity report, the market moves since the US elections have been both big and surprising. The so called Trump trade, which has five main manifestations – short duration, long US equities, long the dollar, short EM, overweight Banks and Cyclicals vs Defensives – appears to have been “successfully captured by only few types of investors.” In JPM’s conversations with clients, the majority “have been either too slow or too reluctant to jump into the Trump trade post November 8th.”
Why? “Their reluctance stems from a general belief that markets are getting ahead of themselves and from a general dismissal of the idea that Trump represents a game changer for markets.”
Ironically, for years the markets were climbing a wall of worry leaving most hedge funds – who were understandably hedging the downside – underperforming the S&P500; now that they finally got a “wall of optimism”, they have again decided to shy away from it.
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