The S&P 500 came extremely close two times today, but came up short of taking out its all-time high of 2,193.81 seventy trading days ago back on 8/15.  The third time was the charm, though, as the index just took out its summer high, ending a streak of 69 trading days without a new all-time high.  Believe it or not, since the S&P 500 ended a streak of 1,382 trading days without a new high back in April 2013, the most recent streak of 69 trading days was the second longest streak the index has gone without making a new all-time high.  Back in July, when we broke the streak of 287 trading days without a new high, there was optimism that it would mark an end to the range-bound trading we have seen since early 2015, but that rally quickly fizzled.  Interestingly enough, it was the uncertainty of Donald Trump that contributed to the sideways trading leading up to the election, and now it’s also seemingly the Trump election that provided the catalyst to finally break us out of this most recent streak.

Oil prices are having a good day today on optimism regarding a potential production cut at the OPEC meeting later this month.  Since the election just under two weeks ago, the price of WTI crude oil has rallied just over 4%, so it hasn’t been a major move in either direction nor one that companies who use a lot of oil (like airlines) would be overly concerned about at this point.

While oil prices haven’t seen much of a move in dollar terms, because of the dollar’s rally, prices have been rising a lot faster in other currencies causing a bit more pain for consumers of the commodity in those countries.  The chart below shows the change in the price of WTI crude oil since Election Day for a number of major currencies.  At this point, the only currency where prices have risen less than they have in dollar terms is in British pounds.  For every other currency shown, prices have been rising at a faster rate.  In euro terms, WTI is up nearly 400 basis points (bps) more at 8.6%, while consumers in Australia, Japan, and Brazil are facing price increases of 10%.  Priced in gold too, WTI is up just over 10%.  In Mexico, though, the pain has been the greatest, as the plunge in the peso following Trump’s election, has pushed the price of WTI up over 16% when priced in pesos.

Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week.  The links are mostly market related, but there are some other interesting subjects covered as well.  We hope you enjoy the food for thought as a supplement to the research we provide you during the week.

Trump Effects

December Still A Go by Tim Duy (Tim Duy’s Fed Watch)

While the market still has a lot of pondering to do about the longer-term impact of Trump’s election on the Federal Reserve (witness post-election price action in the long end of the curve or Eurodollar markets), December is  almost 100% priced and looks likely to be a hike, per Oregon economics professor Duy. [Link]

Straight Talk on Trade by Dani Rodrik (Project Syndicate)

Did economists actively deceive the general public about the distributional consequences of trade, fueling the populist backlash Trump rode to office? We don’t necessarily endorse the conclusions Rodrik draws but we think the piece is interesting and worthwhile reading! [Link]

Assessing The Administration

The Education of David Stockman by William Grieder (The Atlantic)

36 years ago another Republican swept to office (although in a less surprising victory than November’s outcome). The internal dynamics of the Reagan Administration are interesting to consider now given markets’ aggressive extrapolation of what policies a Trump White House might pursue. [Link]

Ringside With Steve Bannon at Trump Tower as the President-Elect’s Strategist Plots “An Entirely New Political Movement” (Exclusive) by Michael Wolff (The Hollywood Reporter)

You could be forgiven, based on the outlet, for not taking this long piece on Trump strategist Steve Bannon seriously. But we found it revealing in terms of what Bannon cares about, and therefore what a Trump White House may care about. [Link]

Dollars

How Donald Trump Could Exacerbate a Global Dollar Shortage by Tracy Alloway (Bloomberg)

Since election day, the USD has positively soared, and while that hasn’t shown an obvious influence on other markets like equities, the increase in expense of dollar funding combined with less dollar availability has potential to get painful for the global financial system. [Link]

The bank/capital markets nexus goes global by Hyun Song Shin (BIS)

An illuminating overview of the role the USD plays in global asset markets. Little in this presentation is new from the perspective of Shin’s work, which has focused on this dynamic for some time, but the summary is helpful. [Link; 14 page PDF]

Modern Life

Divorce in U.S. Plunges to 35-Year Low by Ben Steverman (Bloomberg)

Divorce rates are falling and marriage rates are moving very slightly higher. But that doesn’t necessarily mean that more marriages last for the long haul, with demographics and changing norms muddying the picture. [Link]

The Sharing Economy

The Online Platform Economy: Has Growth Peaked? (J.P. Morgan Chase & Co Institute)

While growth of participation in online platforms for labor (for instance, Uber or TaskRabbit) and capital (for instance, AirBnB) remains gaudy compared to many industries, the composition of that growth and turnover within the labor pool should be troubling for companies that depend on huge new inflows of providers. [Link; 28 page PDF]

Code

The Next Generation of Hedge Fund Stars: Data-Crunching Computers by Alexandra Stevenson (NYT)

An overview of the multifaceted and ubiquitous role machines play in the generation and analysis of data sets related to investing. To throw a bit of water on the triumphalism: as one of our team noted about the story, returns from these strategies don’t get a single mention in the article. [Link; soft paywall]

Secrets Of Online Shopping Discrimination (CBS Miami)

In the language of economics, “price discrimination” doesn’t carry the same negative associations as the word “discrimination” in the common parlance. That doesn’t mean, though, that shoppers will be thrilled to find out that their demographics, purchase history, and shopping platform may result in them seeing different prices than others. [Link]