Originally published by AxiTrader
I read a story in the FT yesterday with the headline Trumpflation story is fake news when explaining market moves.
It argued that the initial positive move in stocks and the US dollar and the spike in bond rates and the notion of Trumpflation (what I've been calling Trumponomics) was fake news because "the change in sentiment is driven more by a sharply reduced fear of deflation than by heightened concerns about inflation. Less downside risk, not greater upside potential, better explains the market moves in the past few months".
I tend to agree.
These moves were based on the changed conversation about the outlook for the US and global economy. In particular traders and central bankers seemed to simultaneously pivot away from a fear of deflation and look toward a bright future
But I also strongly disagree with the idea Trumpflation was fake news. That's because there has actually been a change in global data flow and the economy.
More particularly, the Trumponomics rally was based in fact as much as hope and a changed conversation. You can see this clearly in the relationship between the improvement in G10 economic data relative to expectations of the economic forecasting community and the rally in the S&P 500.
That is, economic data was beating the expectations of pundits by a considerable margin. 
So, as I have written before, I believe what the hope of Trumponomics - Trumpflation - did was allow traders to trust the improvement in the data across the US and the rest of the G10 economies. At the same time that G10 data starting comprehensively beating expectations so too did emerging market economic data.
Importantly, at the same time G10 data starting comprehensively beating expectations so too did emerging market economic data start to comprehensively beat expectations.
So we had a self-perpetuating belief that Trump had changed the global central bank and economic conversation coincide with an actual improvement in the data. And from that we have a fundamental - not fake - underpinning of the markets rally.
So is it any wonder US stocks recovered from their Asia market lows overnight.
But the question now for traders is pretty straight forward.
As stocks start to slip relative to the dataflow, and some faith in president Trump's ability to actually deliver on the tax and infrastructure disappears, can the data mitigate a larger pullback in stocks and thus a risk-off rally around markets.
So far the answer is yes - last night's price action showed that.
While the data continues to beat stocks are likely to be supported. That is unless or until president trump either delivers on tax cuts, or fails miserably.
If the latter happens - and trump proves ineffective - then we'll know that Trumpflation and Trumponomics was fake news. But for the moment markets continue to give the president the benefit of the doubt.
Looking at the chart of the S&P 500 CFD against this backdrop it is worth noting the low of the past 24 hours in the 2317/18 region was just a point or so above the 61.8% retracement of the late January to late February rally which took the S&P 500 to its record high.
While 2316/17/18 holds the S&P looks okay. But a break would suggest a retracement back to the start of the rally around 2264.
That's a level just a few points above the 2258/59 level I've been targeting on the daily charts as a garden variety 38.2% retracement level of the Trumponomics rally. A pullback to this level - this zone between 2258 and 2264 is still my base case.
But for now the buyers remain steadfast.
Here's the chart.
Have a great day's trading.