Welcome to the longest bull market in history, though it may not look like much of a party this morning.

Wall Street looks ready to take a dip after two of Trump’s top one-time aides were rung up on charges after Tuesday’s closing bell and one pointed the finger at his former boss. The headlines are likely to be a distraction for investors today.

The “story has legs and we don’t’ know where it will go,” Chris Weston, head of research at Pepperstone Group, told clients, though he says “a big market shock doesn’t’ appear to be on the cards.

In any case, investors can’t be blamed for once again asking whether their long run of good fortune will finally be derailed by Washington politics. That leads us to our call of the day, from Paul Donovan, chief economist at UBS Global Wealth, who has an idea of just when investors watch out.

“U.S. President Trump faces either double trouble or a witch hunt, depending on which interpretation of events one wishes to use,” he says in an audio commentary for clients. “Directly, this matters if politics impacts either U.S. policy or the markets view of the risks around U.S. policy.”

When to worry? If economy policy is used as a distraction from the headlines, he says.

“This is where trade risks come in,” he says. “The U.S. president has very considerable power over trade policy, and taxing U.S. consumers via trade taxes can be made to serve the ‘Make America Great Again,’ slogan. To that extent, the U.S. administration may feel that increased trade tensions are a way of hiding domestic political troubles.”

And trade has been a recurring headache for investors, although it, too, hasn’t been able to pull this bull market off track. As Joshua Mahoney, market analyst at IG, notes, markets recognize Trump is divisive, but they also like his economic expansionary policies. “Any threat to a second term will rattle markets.”

Read: Trump condemns Manafort conviction as result of ‘witch hunt’

U.K. prediction market Betfair shows implied probability of Trump leaving before his first term spiked to the highest level in three months (36% from a low of 21% in July) after Tuesday’s two courtroom events. So outpointed RBC chief currency strategist Adam Cole.

Read: Investors may be underestimating the risk stocks face from the midterm elections




Key market gauges

Futures for the Dow

YMU8, -0.06%

S&P 500

ESU8, -0.13%

and Nasdaq-100

NQU8, -0.10%

 have pared some losses, but still point to a struggle later. That’s after the S&P

SPX, -0.10%

 apped a new all-time intraday high on Tuesday, and the Dow

DJIA, -0.04%

and Nasdaq

COMP, -0.12%

also advanced.

Oil

US:CLU8

is flying, while the dollar

DXY, -0.20%

is off a bit and gold

GCZ8, +0.44%

 is firmer. Asia stocks had a mixed day but European stocks are pushing higher.

The chart

Industrial stocks have been on a charge, notes The Daily Shot. It uses this chart to show how the sector, represented by the Industrial Select Sector SPDR ETF

XLI, -0.34%

 has stacked up against the S&P 500.




What’s more, fund managers have been underallocating the sector, which means those companies look ripe for buying, it says, and makes the point with this chart:




See the full post here.

The buzz

Trump talked real estate and cooking chickens and got a “lock her up” chant started at a rally in West Virginia last night, but didn’t mention the trouble facing former campaign chairman Paul Manafort and lawyer Michael Cohen.

Meanwhile, Cohen’s own lawyer, Lanny Davis, said in a couple of interviews Tuesday night that his client may have useful info for special counsel Robert Mueller. And here are the juicy tidbits from the case against Cohen.

Trade tensions remain in the spotlight, with the U.S. and China set to sit down for yet another attempt to negotiate a truce. Meanwhile, Trump last night said he threatened to slap a 25% tariff on every car imported to the U.S. from the EU.

And Mexico may have thrown up a roadblock to a new Nafta deal.

A California fire department battling the biggest wildfire in the state’s history says Verizon

VZ, +0.00%

throttled its data plan to the point where communications became impossible. That court document was part of a fight by 22 state attorneys to get net neutrality reinstated.

Apple CEO Tim Cook donated around $5 million in shares of the iPhone maker to charity, according to an SEC filing from Tuesday.

Target

TGT, +6.68%

 is soaring after strong earnings and an improved outlook. Urban Outfitters

URBN, +6.69%

 is getting a boost from its own earnings.

In deal news, Hartford Financial Services

HIG, -1.64%

 will buy The Navigators Group

NAVG, +9.07%

 for $2.1 billion.

As for economics, we’ve got existing-home sale and the minutes of the Fed’s latest central bank meeting coming today.

The quote

“They overdrew their bank account more than 1,100 times in a seven-year period resulting in approximately $37,761 in ‘overdraft’ and ‘insufficient funds’ bank fees.” — That’s just a taste of the lengthy indictment against House Republican Duncan Hunter and his wife, who have been charged of using more than $250,000 in campaign funds to pay for an array of personal expenses, such as expensive vacations, school fees and even hefty fast-foot bills.

Random reads

Congo braces for crisis as Ebola death count hits 55

Finnish city declares itself the Capitol of Space, and reaches out to Elon Musk

Ryanair customers suffer twice.

Providing critical information for the U.S. trading day. Subscribe to MarketWatch's free Need to Know newsletter. Sign up here.

Let’s block ads! (Why?)


Source link