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Welcome Back President Trump:
Major Index Performances (as of Friday 2 pm):
- S&P 500: The benchmark index rose 1.61%
- Dow Jones Industrial Average: The Dow Increased 2.06%
- Nasdaq Composite: The index is up 1.42%
- Gold: The Precious metal is up 2.62%
The Trump Rally Continues: Donald J. Trump was sworn in as President on Monday, January 20th. Adding to the significance of this event, Monday was Martin Luther King Day. According to the stock market, President Trump’s pro-business policies is what Wall Street wanted. A market-friendly Donald Trump has been talking up policies to boost growth and lower taxes while dialing back plans to immediately disrupt the world trading order.
Despite the protectionist threats of the campaign trail, Trump held off on imposing levies on key trading partners this week, and just Thursday night delivered his most mollifying message yet to China by saying that he would rather not have to use tariffs against the world’s second-largest economy. Additionally, he proposed new White House-backed AI investments and friendly words to allies. Trump’s posture is adding fuel to the market melt-up. This week could wind up being the best start for a new president since Ronal Reagan took the Oval Office in 1985.
Global shares have extended their longest advance since August, while haven assets such as Treasury bonds have retreated in the holiday-shortened week. Michael Kelly, the global head of multi-asset at Prine Bridge Investments stated. “It’s going to be a very, very pro-business, pro-capitalist, remove-all-the-obstacles type of setting; it’s going to be let-it-rip economically and politically. Markets like that.”
Three Takeaways from the Economy This Week:
- President Trump’s blitz of executive actions covered multiple areas. Among the most consequential for the economy are efforts to stem illegal immigrant flow across the southern US border, the declaration of a national energy emergency, and tariff threats against several major trading partners. Though there’s still a wide band of uncertainty around Trump’s ultimate tariff policies, our tentative base case is for a less aggressive approach than what the candidate mentioned on the campaign trail.
- The dollar depreciated an average of 1.7% this week as Trump announced plans to raise duties on Mexico and Canada to 25% from Feb. 1, while threatening to raise China tariffs by less than he pledged during the campaign. We see the decision to provide a specific date for Mexico and Canada tariffs as a signal that Trump is leaving room for negotiations. For context, the dollar appreciated roughly 4.9% between the Nov. 5 election and the Jan. 20 inauguration on concerns about Trump’s tariff policies.
- Jobless claims remained relatively low in the survey week for the January jobs report, suggesting the California wildfires failed to significantly move the unemployment rate. With 180,000 people subject to evacuation orders, claims in California increased the most.
For our readers on the coast of North Carolina, we hope you stayed warm this week and enjoyed the “Once in a decade” snowfall. I will admit, when I hit the top of the hill with my wife’s old-fashioned wooden sled with its rod iron rails, lubricated with Pam spray, I felt like the envy of our neighborhood. I also realized sledding at 15 years old is a lot different than sledding at 54.
Have a wonderful weekend, and if you happen to be in the NC area, brace yourself for next week’s winter blast. Stay warm and be safe.
Your OmniStar investment team
*Bloomberg Research
