Trump Overseas, What Could Go Wrong??

Get your popcorn ready (we all know Putin is) as the world watches President Trump’s first overseas trip and meets with other world leaders. He hopefully doesn’t have an international incident that rattles markets ahead of the 3-day weekend coming up for Memorial Day. On the economic front, we have Durable Goods, University of Michigan Consumer Sentiment and Preliminary GDP.

President Trump Overseas: Besides multiple chances to embarrass the US, he will likely be announcing bilateral deals with other nations which could affect the Aerospace and Defense sector, such as the $110 Billion arms deal with Saudi Arabia he announced on Saturday (5/20). Investors will be listening to any announcements made on the trip which could help individual companies. Additionally, investors will be watching for any tweets the President makes on his trip that completely contradicts any of his statements. For example, he made a speech in Saudi Arabia on Sunday telling Muslim majority countries to redouble their counter terrorism efforts. By the time you read this he could already have already tweeted a complete contradiction rattling markets.

GDP Second Release: On Friday (5/26), we get our second release of US GDP for the 4th quarter. We get 3 releases, Advance, Preliminary and Final. The first release is the most impactful. However, if a line item were to surprise in the Preliminary reading, the markets can react accordingly. The first release came in at a weak 0.7%. If we get better than expected information with this reading on the consumer, we can expect to see equities go higher. If the consumer comes in weaker, expect equities to fall.

FOMC Meeting Minutes: 8:01, 8:02, 8:03. The latest Fed meeting minutes are scheduled to be released on Wednesday (5/24). Investors will be looking closely at the language of the minutes to see what may have changed from the previous FOMC meeting. They will also be searching for any hints as to the timing of potential rate hikes for later this year which could affect the US Dollar and Treasury Yields.

OPEC Meetings: On Thursday (5/25) OPEC meets in Vienna. Investors will be waiting to see if OPEC will agree to an output cut extension and for how long. The market is forecasting a cut that will last until the end of this year. However, they could go out even further to say 12 months. In both instances, this will send the price of oil higher. If they can’t come to an agreement, expect the price to drop on oversupply.

Central Bankers Speak: This week has 4 FOMC Member scheduled to give speeches across the country.  As the Fed looks to potentially hike rates again, Investors (and algos) will look to see if we have more hawkish comments than dovish comments. More hawkish comments will have the projections on rates steepening, sending the Dollar and interest rates higher, along with helping the banking sector. More dovish comments may see interest rate projections flatten, pushing Treasuries higher.   

Super Mario Speaks: On Wednesday (5/24) ECB President Mario Draghi is scheduled to speak in Madrid. Investors will be listening to potential changes to the banks quantitative easing program since the European economy looks to be standing on better ground. Any hawkish comments would send the Euro higher amongst most currencies and send stocks lower.     

Bank Holidays: Exchanges across Europe will be closed on Thursday (5/25) for Ascension Day. Volume will likely be subdued for the holiday shortened week. So we can potentially expect outsized moves and lower liquidity than normal. 

I want to thank the MTA for your excellent service this past week with trains in Astoria down for an hour at rush hour Thursday night and Friday morning causing my friend to take a $90 UBER for a 3 mile ride. Keep up the great work!!!