The Trump Effect

Excellent piece on Donald Trump and an immediate overview of how the markets are likely to react to the first 100 days of his Presidency by Tim Mullaney in Marketwatch today [here].

Trump is a showman. Lots of soundbites, lots of show but he’ll be judged on substance?

A showman like Trump talks a good game but talk is cheap. Making promises he’ll be unable to keep or even be inclined to keep particularly on growth (promsies 4% annual growth) will pose questions as to whether he can fulfill any of his promises.

A quick look at some of his speeches and what he’s going to do on Day One means he’s going to be up all night.

This is not a popular man and although its unwise to bet against America with an economy at near full employment the signs of strain could appear very quickly.

We also have by far the world’s largest concentration of great, innovative companies — especially in Silicon Valley, where Trump got 21% of the vote and few leaders take the new president seriously.

That said, uncertainty remains and its early days. Its still unclear whether Trump’s victory is going to be a threat or a benefit  to the U.S. Dollar in the medium-to long term but in the short term its hard to be BULLISH and then technicals support this view.

We are SHORT the SPX500 and SHORT the USD.

The GBP is one currency that could do well over the next few months as the heat is taken out of the dollar . If, as expected, Tuesday sees the EU Membership Court rule against the Government we should see a continuation of GBP’s recent rally.

If we see the US Dollar Index decline further as expected over Q1 SHORT positions on the USD should prosper.

The risk appears to be all to the downside but all SHORTS should be covered in the event of any surprise FED announcements that suggest a faster rate rise expectation.


Leave a Reply