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Need to Know: Here’s why stocks could rally if Trump heads for the exit Need to Know: Here’s why stocks could rally if Trump heads for the exit
The Dow and S&P are trudging toward ending with losses for the week, as “Trump to Comey: You’re fired!” remains the news story that... Need to Know: Here’s why stocks could rally if Trump heads for the exit

The Dow and S&P are trudging toward ending with losses for the week, as “Trump to Comey: You’re fired!” remains the news story that keeps on giving.

The sad-sack retail sector is still getting attention as well. Fresh sales data and J.C. Penney’s results are hitting in the wake of Macy’s Monty Python-esque “We’re not dead” remark.

President Donald Trump is showing no signs that he will resign as the FBI firing controversy rages on, even if Democrats are dreaming of impeachment. Nonetheless, stock pundits are talking about how the market might react to such a move.

“What would U.S. stocks do if President Trump suddenly resigned? Based on recent price action, the answer is clear: Rally 3-5%, at least, over a day or two,” says Convergex’s Nick Colas for our call of the day.

“U.S. equities see through the headlines (like the Comey firing) and essentially believe two things,” the chief market strategist writes. “First, corporate earnings are growing nicely. Second, the Republican-led Congress needs to pass tax reform by the 2018 midterm elections.”

The market will “favor anyone who can push item #2 to a speedy conclusion while not screwing up #1,” Colas says. Another driver for stocks is long-term interest rates are going nowhere, he adds.

The strategist trots out data on correlations to back up his take.

“Average S&P large-cap sector correlations dipped in the last month and are averaging just under 60% YTD. That’s a clean 20 points lower than the 2009-2016 experience and shows fundamentals now matter again,” he says.

It’s a prediction that might not sit well with many people — investors who think stocks have rallied enough already, Trump’s fans, anyone tired of the Comey story, #Resist folks who want an impeachment rather than a resignation, and so on.

“Not sure I agree,” Ritholtz Wealth Management’s Josh Brown writes over at his Reformed Broker blog in response to Colas’s take. But Brown adds that it does fit with his own view that “the Trump Trade, if there ever were such a thing, ended five months ago, and the new reason for bullishness has become plain and simple earnings growth.”

Read: Trump admits Russia probe played into Comey’s firing

Key market gauges

Futures for the Dow

YMM7, -0.06%

 , S&P 500

ESM7, -0.07%

  and Nasdaq-100

NQM7, +0.08%

 are little changed. The Dow

DJIA, -0.11%

 and S&P

SPX, -0.22%

 are down a respective 0.4% and 0.2% for the week as of yesterday’s close, after scoring three up weeks in a row, while the Nasdaq Composite

COMP, -0.22%

is 0.3% higher.


CLM7, +0.13%

 is rising a bit, staying on track for a weekly gain of more than 3%.

See the Market Snapshot column for the latest action.

The chart

You know all that bullish bellowing about European stocks? It might be time for it to stop because the buying opportunity is over for one recent big winner — Spain’s market

EWP, -1.34%


So suggests Market Anthropology’s Erik Swarts, as he provides the above chart. It shows how he thinks Spanish stocks (the red line) are behaving like Japanese stocks in the late ’90s (the black line). He sounds downbeat on U.S. stocks, too.

“We have a strong suspicion that the wisdom of crowds today in stocks has created enough distortion from reality that it makes sense to walk away from it,” Swarts writes.

The buzz

J.C. Penney

JCP, -7.36%

 is on track for a big down day following weaker-than-expected quarterly sales, after Macy’s

M, -17.01%

 report helped sink department stores yesterday.


AMZN, -0.14%

 Prime video app — long absent from Apple TV — is now headed to that set-top box, says a BuzzFeed report citing unnamed sources.


AAPL, +0.86%

 also has inspired a bullish note from Goldman Sachs, which sees a $1,000 iPhone on the way, and the gadgets giant has issued $7 billion in corporate bonds.


BCS, -2.30%

BARC, -0.53%

CEO Jes Staley emailed a prankster, thinking he was the bank’s chairman.

Let’s make a trade deal: The Trump administration and Beijing have agreed on measures that ought to lead to better access to China for U.S. beef producers, payments providers and other industries.

The stat
Getty Images

Amazon CEO Jeff Bezos opening a trading session in 2003.

20 years old — That will be the age of Amazon’s stock

AMZN, -0.14%

 come Monday, as its first day of trading was May 15, 1997. It was at $2 back then (adjusting for splits), as Barron’s has noted. Shares closed around $948 yesterday.

The economy

Readings on inflation and retail sales arrived before the open and showed growth, and releases on consumer sentiment and business inventories hit once trading is under way.

Read: Whew — the U.S. economy really isn’t slowing

The Chicago Fed’s Charles Evans was scheduled to speak in Ireland ahead of the opening bell, and the Philly Fed’s Patrick Harker is on tap to talk at Drexel University around lunchtime.

Check out: MarketWatch’s Economic Calendar

The quote
Getty Images

Isn’t one great white shark scary enough?

“Attention in the water: … You are paddleboarding next to approximately 15 great white sharks.” — the Orange County Sheriff’s Department delivered that warning this week to a group of paddleboarders from a helicopter. That led to the group making it back to shore unharmed and a viral video.

See: These are not the words you want to hear while paddling off the California coast

Random reads

Don’t forget about Mother’s Day this weekend — or the holiday’s dark history.

This couple will wed after losing 600 pounds together.

And a marriage proposal has stolen the show in the Eurovision Song Contest.

Remember Zika? Brazil says its public health emergency is over.

Lawyer for man dragged from United flight isn’t laughing at viral New Yorker cover.

A Harry Potter prequel that J.K. Rowling wrote on a postcard has been stolen.

Is that you, Goldman? A giant squid the size of a cargo container stuns locals:

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