Equity bulls have received a lot of good news in the past 12 to 18 hours — data shows grwoth remains strong as German inflation, China manufacturing, PMI and ISM data all were positive, JPMorgan said in a midday note on Wednesday.
The Fed is reflecting the data with members making hawkish comments, which points to an increase in optimism that the FOMC will raise rates in March rather than waiting until May or June. JPMorgan is sticking with its view that the hike will occur on May 3. The combination of economic data and Fed projectioins are sparking a surge in the banks. The KBW Nasdaq Bank Index (BKX) is up 3% Wednesday and 8% year-to-date.
Overall, the narrative remains the same — Trump’s speech on Tuesday was short on specifics but investors remain positive on his pro-growth plan even without knowing what he’ll end up proposing. “The GOP pro-growth agenda faces a very long and arduous path through Congress but markets will likely give Trump/Ryan/McConnell the benefit of the doubt until at least until April 1 and maybe even until Memorial Day,” JPMorgan said.
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