Donald Trump's First 100 Days
Trump has made big statements on his vision for the US economy. Although these comments invigorated voters, there remains little that could be regarded as a true policy roadmap.
This is the problem with putting a businessman in charge of a country. He is quite out of his depth in his understanding of how you make large political changes happen, and make them happen quickly.
In his business persona, Trump is famous for simply firing ineffective or troublesome people. He is quickly finding out this does not translate to a viable way to run a government.
It seems that there has been no bad news for stocks in the Trump trade. Increased rates and changes to regulation have all meant one thing for the indices in the short term: record highs.
Meanwhile the US dollar is in two minds, with Janet Yellen telling the markets they are trying to lay foundations for ‘sustainable growth’ while Trump says he wants ‘rapid growth’ – something will have to give. The dollar has performed worse than expected against the Japanese yen. Many experts think this is the way Trump wants it. Certainly, any interest rate rises should have pushed USD/JPY closer to 113 and perhaps to recent highs at 120.
The markets, however, have not yet had to deal with any serious external political incidents. With North Korea now fully in the mix, and with Trump firmly on the ‘America first’ standpoint on all global aspects, his comments on not needing China have certainly seen the indices re-think, getting back to record highs.
The next 100 days
2359 in the S&P 500 is a good pivot. This in the short term will show if the bulls or bears are in control. If Trump’s tone becomes more aggressive, I can see the S&P falling to 2300. If we see any more direct ‘war’ comments then the index could be trading 2189 in no time.
The ultimate test for the dollar and the markets in general is how well Yellen can control the real economy around what Trump thinks he can just materialise. Rates are going up, and while citizens chase the American dream by buying even more expensive houses at higher inflated rates, there is plenty of scope for another correction.
The subprime mortgage is not the key here. It’s now subprime car loans and student debt that will be to blame. Either way, letting people borrow more and more after a crash for extended periods can only end in one outcome.
Trump has to be the man who can not only keep America believing it is great again, but can create actual, sustainable growth. Despite the jobs numbers and real wage growth, the ability for average Americans to live within their means is still being severely tested.
Chief Market Strategist, InterTrader
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