Dollar weakness remains the name of the game, which has been concomitant with the pricing out of Fed rate hike potential in the remainder of 2017.
How to Trade President Trump
Things are not looking that great in the US economy and the dollar begins letting it go. However, the main culprit regarding the dollar's fall is the US President. Every day is followed by a new revelation, with the FBI firing and the disclosure of classified data hurting. Other major currencies are stable but also feel some pressure. And for a change, commodity currencies are enjoying a recovery...
We continue to think that the bar to impeachment is high, after all, there are some questionable aspects to Comey’s character (remember the reopening of the Hillary emailgate a few weeks before last year’s election?), and the Republican Congress may be wary of starting proceedings...
|Key Trump Promise||Effect on Stocks||Effect on USD||Effect on Gold|
|Increased fiscal spending/stimulus - Particularly on infrastructure and defense||Bullish - Increased economic growth and industrial production help boost equity markets||Bullish - Increased spending leads to higher inflation and interest rates, pushing up USD||Bearish - Higher growth, interest rates, US Dollar and stocks should weigh on Gold|
|Lower corporate taxes - Down to 15% from 35%||Bullish - Lower taxes increase after-tax cash flow and earnings, and bring income back to ||Bullish - Economic growth through lower taxes and fiscal stimulus boost interest rates / USD||Bearish - Higher growth, interest rates, US Dollar and stocks should weigh on Gold|
|Financial deregulation - Repeal heavy regulations on Wall Street and corporate America||Bullish - Fewer regulatory hurdles increase financial and banking activity, fostering business growth||Bullish - Increased financial activity leading to economic expansion should lift interest rates and USD||Bearish - Higher growth, interest rates, US Dollar and stocks should weigh on Gold|
|Increased job creation - Retain and create jobs in the US||Bullish - More jobs lead to higher spending, demand and increased business growth||Bullish - Better employment rate leads to hawkish Fed and higher interest rates / USD||Bearish - Higher growth, interest rates, US Dollar and stocks should weigh on Gold|
|Protectionist trade policies - Tariffs and restrictions on Mexican, Chinese ||Bearish - Restrictions on trade can create trade wars and backlash on US companies doing business abroad||Bullish against targeted EM currencies, Bearish overall if trade wars result||Bullish if trade wars result, which could boost gold as a safe-haven currency alternative|
What is the Trump trade? How long it will last and what are the major things that the trader should focus?
After the elections in Europe this year, it will become increasingly clear that the Brexit is good for both parts, the United Kingdom and the European Union. Sterling will be a good bet for the second half of 2017.
US stocks going to rally another 10% before summer and then we will see risk off. It is time to make a big switch to bonds.
Donald Trump, a billionaire real estate mogul billed as the ultimate outsider, aims to shake up the US political establishment, which could potentially cause extensive market volatility along the way. Going forward, Trump should have a substantial impact on various key financial markets such as US Dollar, Euro, Yen, Pound and other important currencies as well as stocks,
Trump was the second major-party presidential nominee in American history whose experience comes principally from running a business (Wendell Willkie was the first). By getting elected, Trump became the first United States President without prior government or military experience, and the first without prior political experience since Dwight D. Eisenhower.