ETF Trends publisher Tom Lydon discussed the current state of the markets on CNBC’s ‘Closing Bell’ on Monday.
Joining Lydon in the discussion was “Fast Money” trader Steve Grasso and CNBC’s Rick Santelli.
U.S. stock exchange traded funds are making a huge comeback after the pre-election correction. Investors largely focused on fixed-income ETFs earlier this year but have funneled billions into stock ETFs since Donald Trump’s victory.
The Trump presidency bolstered the U.S. growth outlook, strengthening areas like small-caps, financials and industrials. Specifically, Trump has called for protectionist policies and increased fiscal spending to bolster the U.S. economy. The protectionist policies help support smaller domestic companies. Less regulation on banks and rising rates help financials. Infrastructure and industrials also benefited from Trump’s focus on building up America.
On the other hand, Emerging markets have been among the worst off in the wake of Trump’s victory. Trump has called for protectionist policies, which could hurt export-oriented emerging markets. The strengthening USD has also weighed on emerging assets.
Moreover, gold has lost its luster as a safe-haven play in a risk-on environment. With gold pegged to the USD, a higher dollar makes more expensive for buyers outside the US as the dollar has advanced since the election. Gold also does not offer a yield and becomes less attractive in a rising rate environment.