S&P

For the past year, Deutsche Bank was one of the most stubbornly pessimistic banks. Then, overnight, everything changed for one reason: Donald Trump.

The German bank laid out its 180-degree change in opinion in a 30-page Friday note titled "Trump: the huge picture for stocks", in which it revealed that it now expects the S&P to easily rise to 2,250 by Trump's inauguration, and then rise to 2,500 by 2018 "before suffering its next bear market."

While not necessarily the "huge picture", here is the big picture summary of DB's note:

As of today, 95% of the companies in the S&P 500 have reported earnings for Q3 2016. 72% of the companies have reported earnings above the mean estimate and 55%of S&P 500 companies have reported sales above the mean estimate. More importantly, however, according to FactSet in Q3 the earnings recession officially ended after five consecutive quarters of EPS declines: for Q3 2016, the blended earnings growth rate for the S&P 500 is 3.0%. The third quarter marks the first time the index has seen year-over-year growth in earnings since Q1 2015 (0.5%).

In light of expectations that the Trump fiscal stimulus plan will unleash a new Golden Age for the US economy, driven in part by the repatriation of hundreds of billions in funds held offshore, yesterday we showed a disturbing analysis from Citigroup according to which the bank's share-shrinker portfolio has soared relative to the S&P following the US election. The implication was clear: as fas as the market is concerned, much if not all of the capital repatriated from overseas will be promptly returned to shareholders, and maybe much of the corporate tax cut as well.

Donald Trump’s election victory has driven significant rotation across global markets. Bond yields are up, the USD has strengthened, DM equities have risen, EM equities have fallen and cyclical stocks have outperformed defensives.  Amid the chaos, Citi's Global Equity Strategy team has attempted to craft some "Trump Trades" to help investors take advantage of the volatility.

It has been more of the same this morning as the dollar extended its advance on the still undeteremined Trump reflationary policy measures after Yellen signaled an interest-rate hike could be imminent, while bond yields around the globe rose again, metals declined,  European stocks advanced and futures were modestly in the red just shy of all time highs.