*Performance since 7/1/2022. For more details on the performance calculation and methodology of Alpha Picks, click here. |
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*Performance since 7/1/2022. For more details on the performance calculation and methodology of Alpha Picks, click here. |
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► The re-election of President Donald Trump sent stocks rallying, with major U.S. indexes reaching all-time highs on November 6th; the S&P 500 rose 2.5%, the DOW surged by 3.6%, and the Nasdaq 2.95%.
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► Treasury yields spiked, with the 10-year reaching 4.47%, waking the bond "vigilantes" concerned over rising debt and inflation. Meanwhile, the USD posted its biggest gain since 2020. |
► President Trump's proposal to impose tariffs up to 10% on all U.S. imports propelled macroeconomic discussions, with potential increased geopolitical tensions and trade wars. |
► Corporate news was dominated by earnings and stock movement. Tesla's +25% surge in the last week was partly due to CEO Elon Musk aligning his company with the new administration. |
► Crypto rallied, with Bitcoin surging to a new all-time high of $77,000, driven by Trump's anticipated crypto-friendly stance and potential deregulation. |
► The Federal Reserve proceeded with the second rate cut for the year, bringing down the benchmark federal funds rate range between 4.50% and 4.75%. |
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Trump Trade Full Steam Ahead: Global Markets Rally
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The re-election of Donald Trump as the 47th President of the United States has been the most impactful event this week. Market reaction has been immediate with surging stock indices, the U.S. dollar, and cryptocurrencies. The S&P 500 notched its best day in two years, a gain of 2.5%, as the Dow Jones rallied 3.6% and the Nasdaq 2.95% on November 6th. Politically, Trump's re-election signals a return to protectionist policies, as new tariffs could reshape U.S. trade dynamics. Economically, while the expectations for tax cuts and deregulation boost stock markets, the potential for increased tariffs poses risks of inflation and trade wars, which have become a common thread, particularly involving U.S.-China relations. Tariffs and trade wars may also influence market stability amid heightened concerns about the resurgence of inflation and fiscal deficit. |
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Treasuries and the "King of Debt"
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Treasury yields spiked, with the 10-year reaching 4.47%, waking the bond "vigilantes" over concerns of rising debt and inflation. |
Despite a skyrocketing U.S. dollar and traders' optimism that a second Trump administration could be positive for business in an already strong economy, fear of rising debt is also top of mind. Where the Federal Reserve is responsible for short-term rates, yields on the U.S. 10-year Treasury and indicators of long-term yield movements showed a marked increase, reflecting investor demands for higher compensation amidst rising debt levels. Fiscal policies proposed by Trump, such as expansive tax cuts, are seen by many economists as potentially exacerbating the U.S. debt situation, which could surpass 100% of GDP. This looming fiscal uncertainty has lent strength to the "bond vigilantes" who are keeping a vigilant watch on government expenditures and potential inflation triggers. In a recent statement, economist Edward Yardeni, who coined the term "bond vigilantes," states: "We aren't [yet] calling for the 10-year Treasury yield to reach 5%, but the 'Bond Vigilantes' seem to be threatening to take it there," said veteran market strategist Ed Yardeni, who coined the term back in the 1980s. "Investors often hear 'Don't fight the Fed,' but perhaps it's the Fed that shouldn't be fighting the 'Bond Vigilantes.' The bond market could easily nullify the impacts of another rate cut. That's because the bond market believes the Fed is cutting rates by too much, too soon, and is therefore raising long-term inflation expectations. These expectations are heightened by concerns about more fiscal excesses from the next administration." |
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As stock markets fluctuate, if you're looking for a tool that simplifies stock picking by analyzing financial data to highlight stocks with the strongest investment fundamentals, Alpha Picks offers a more efficient approach to smarter investing. Alpha Picks leverages Seeking Alpha's powerful quantitative stock-picking system, delivering two data-driven stock picks each month, helping investors save time and focus on high-quality opportunities. |
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Geopolitical Events: Tariffs
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As highlighted in last week's newsletter, geopolitical tensions have increased as the European Union enforced steep tariffs on Chinese electric vehicles, escalating their trade war. President Trump's re-election is likely to follow suit, as proposed tariffs, particularly on Chinese imports, and a tougher stance is expected from Trump's Administration. The Ukraine-Russia conflict remains a persistent source of friction. In the Middle East, the war between Hamas and Israel persists, and tension with Iran looms. Trump's policies may further complicate relations in the Middle East, particularly concerning Iran, as speculations about Iran's nuclear capabilities increase – a significant risk to global energy prices. |
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Financial Services (XLF) was the top-performing sector over the last month. Post-election, the Consumer Discretionary (XLY) sector has led the charge, soaring +6.5%, leading the GICS performance this week. |
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Financial Services is the best-performing sector over the last month |
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In contrast, defensive sectors like Utilities and Healthcare lagged. With the potential for lower taxes and deregulation on Trump's agenda, small-cap growth stocks could stand to benefit. |
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While growth stocks continued to outperform, Small-Cap Value (IWN) surged this week to outperform Small-Cap Growth (IWO), boosted by investor confidence post-election. |
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Over the last month, small-cap value and small-cap growth have also rallied. |
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Small-cap stocks can be a compelling option for growth-oriented investors, but they tend to come with more risk. As highlighted in an article by Michael A. Gayed, CFA, titled VTWG: Small-Cap Growth Could Win Big Under Trump, "The initial reaction to a Trump win? Bullish for small-caps, which have languished really since 2011 relative to large-caps. Maybe that's about to all change cycle-wise. Lower taxes and deregulation should be positive for small-cap companies." |
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Join Steven Cress, VP of Quantitative Strategy, for a free webinar on November 13, as he explains how he and his team use Seeking Alpha's industry-leading Quant System to find and rate stocks across the market for our Alpha Picks service. Register now to learn how data-driven insights can guide your next investment decision.
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Cryptocurrencies, led by Bitcoin (BTC-USD), surged this week, reaching an all-time high of +$76,000. This surge is likely attributed to President Trump's pro-crypto rhetoric, which investors believe will lead to a more favorable regulatory environment for digital currencies. |
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Cryptocurrencies Update: Bitcoin Market Cap Reaches Record High
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Other major digital assets like Ethereum (ETH-USD) and Solana (SOL-USD) also posted significant gains, reflecting bullish sentiment. Elon Musk's support for crypto, particularly Dogecoin (DOGE-USD), suggests a continuing trend where influential figures pave the way for more potential interest in crypto, promising long-term potential growth opportunities in the sector. |
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The U.S. dollar strengthened significantly, surging nearly 2% against major currencies like the Euro and the Pound. The surge was fueled by a combination of market optimism on Trump's fiscal policies and rising bond yields, but it gave back post-election gains amid the rising Yen and Pound. |
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The USD experienced its highest level in 52 weeks post-election amid trade policies that could slow the Fed's pace of monetary policy. However, the USD slid following the Bank of England cutting rates as expected, and the British Pound gained as much as 1% against the greenback.
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Chart of the Week - How Many More Rate Cuts Left?
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Looking at the Citigroup Economic Surprise Index, the U.S. has tended to outperform market expectations since October and is at its highest since April. Simultaneously, we have been experiencing a pullback in dovish Federal Reserve estimates. Based on Federal Funds Futures, there are about -3.6 rate cuts priced between now and the end of December 2025. In September, the median projection from the central bank was 8 by the end of next year. With the central bank already delivering 3 since the beginning of its easing cycle, this means that financial markets expect about -1.5 less than what Chair Jerome Powell and company are envisioning. |
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What is Alpha Picks? Alpha Picks is a rigorous, data-driven model that offers Strong Buy-rated stocks believed to have the highest probability of capital appreciation based on a proprietary quantitative model. Two 'Strong Buy' rated stocks are selected monthly on the first trading day of the month and the 15th or the closest trading day thereafter. The Alpha Picks portfolio has delivered an incredible total return of 176% vs. the S&P 500's 58% since its launch on July 1, 2022. Nine out of 36 Alpha Picks have returned over 100% to the portfolio. With a new administration, investors can benefit from new opportunities to invest. Alpha Picks can help you find those opportunities with an emotion-free approach that consistently produces top-performing stocks. In this latest round of winners, seven Alpha Picks recommendations have surged by more than 10% in a single day. |
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AppLovin Corporation (APP) leads this rally, up 80% over the last 5 days and +540% since it joined the Alpha Picks portfolio in November 2023* Other stocks on this list include: - Synchrony Financial (SYF), picked on September 3, 2024, gained +18.8% in the last week and +31% since its addition to the portfolio.
- Powell Industries, Inc. (POWL), picked on May 15, 2023, has gained +18.14% in the last week and +534% since its addition to the portfolio.
These picks cover a range of industries and sectors, from tech to finance to manufacturing, but they all made the Alpha Picks cut because of their strong fundamentals and growth potential. This stringent evaluation process ensures that every recommendation is measured against more than 100 different metrics before being graded across key factors such as value and profitability, which has enabled Alpha Picks to regularly outperform market benchmarks. In fact, the Alpha Picks portfolio is collectively up 59% year-to-date, compared to 25% for the S&P 500.*
You can see all the stocks (and receive two new 'Strong Buy' recommendations every month) by joining Alpha Picks today.
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Alpha Picks' quantitative, data-driven approach has resulted in the selection of stocks like AppLovin Corporation (APP), which, at the time of its pick in 2023, was trading for $40.45 per share, while APP currently trades for over $272 per share, as it defies expectations, rallying 583% YTD! |
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Economic Rundown ► FOMC – The Federal Reserve cut the benchmark rate by 25 basis points at the November 7th meeting, in line with expectations.
► Inflation – Current inflation trends remain a concern as proposed tariffs and fiscal expansions pose a risk of accelerating inflation. Recent CPI data underscores this risk with modest increases.
► Labor Market – While job growth slowed dramatically in October due to the temporary disruptions of hurricanes Helene and Milton, as well as the protracted Boeing Company (BA) strike, the overall employment rate remained stable relative to September. |
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| Live Nation Entertainment, Inc. (LYV) Grab Holdings, Limited (GRAB) |
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| Home Depot, Inc. (HD) AstraZeneca PLC (AZN) Shopify Inc. (SHOP) |
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| | Cisco Systems, Inc. (CSCO) CPI Release |
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| | The Walt Disney Company (DIS) PPI Release |
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| Alibaba Group Holding Limited (BABA) |
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*Performance is as of November 8, 2024. Alpha Picks adds two stocks per month - on the closest business day to the 1st & 15th. Alpha Picks removes stocks based on rating thresholds (i.e., when a rating changes to a sell). Performance is calculated and reported daily using time-weighted returns. For more details on the performance calculation and methodology of Alpha Picks, click here.
Past performance is no guarantee of future results. Alpha Picks does not take account of your objectives or your financial situation and does not offer any personalized investment advice. Any content and tools on the platform are offered for information purposes only. Any views or opinions expressed may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker, U.S. investment adviser, or investment bank. |
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