President Trump's Inaugural Focus on "America First" Gives Markets Pause
James Chen, CMT January 20, 2017 7:29 PM
The primary message of Trump’s speech was that of putting America and the American people first when it comes to jobs, trade, defense, immigration and other key areas of his agenda. Trump also attacked the Washington DC government elite as he argued for giving power back to the American people. The most notable catchphrase Trump used was “America first,” along with “buy American and hire American.”
As a result of this focus, the speech took on a strong tone that appeared to extend even further Trump’s already-fervent protectionist stance when it comes to foreign trade and relations. This made the markets increasingly nervous, as Trump’s positions on international trade have been widely viewed as a likely negative for US economic growth in light of their potential to result in unproductive trade wars.
Another aspect of the speech that disappointed markets was Trump’s failure to touch on some of his key economic policy objectives that have been the primary catalyst for the Trump rally since the early-November election. While Trump did briefly mention increased infrastructure spending, he refrained from talking about two other key market issues – lower taxes and financial deregulation. These omissions are reminiscent of Trump’s press conference last week, when he also failed to reference these market-critical concerns.
US stock markets that had been rallying strongly prior to the inaugural address pared gains and dipped significantly during the speech as Trump’s protectionist focus became clearer. Immediately after the event, stocks continued to be weighed down in a trading range as the markets digested the contents of Trump’s speech.
As noted in previous analysis, the inauguration event itself was not likely to cause any great waves in the markets. However, the weeks ahead – further into Trump’s 100-day honeymoon period – should serve as the major test of the integrity of the Trump rally, as words begin to transform into action (or possible lack of action). As the new administration takes office, it should quickly become clear where policy priorities will be placed and how likely it will be that Trump’s economic agenda is fulfilled. During this crucial period, there will undoubtedly be many volatility-inducing dips and bumps as the Trump Administration’s path comes into clearer focus.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.