Trump or Dump?

Ever since Donald Trump won the presidential election in November 2016, stocks have been on a roll, going higher and higher. Just about a week ago, the Dow has rallied past 20,000. Most investors believe that Trump is a boost to the economy as he pledged to spend $1 trillion on America’s aging infrastructure, cutting corporate taxes, and deregulate industries.

However, it seems like the Trump rally is over done and the markets are retracing the advances it made since November. Recently, front pages of news websites are often loaded with information that could cause a sell-off in the markets. Is Trump really that bad for the economy? Are we preparing for a trade war that could spark the next financial crisis?

In my opinion, while Trump is getting his administration settled in, the markets could be correcting itself whenever there is any negative news being published. However, in the next year or two, I foresee strength in the US stock market, as well as the dollar.

While the former makes sense, given that Trump has pledged to focus on his “America first” policy, the latter seems to be much debated whenever discussed.

It’s simple, Trump can say anything he wants to “punish” the dollar, but don’t forget who is the one running the check book. Yes, that is the Feds. We are looking at 3 potential rate hikes this year, and that would undoubtedly send the dollar upwards.

In conclusion, go long in equities whenever there’s a retracement. I believe that the stocks rally is not done till 3,000 points on the SPX. Yes, that’s a 35% gain, but I think it’s very possible for that to happen. What are your views of Trump? Should we trump the markets, or should we dump it?

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23, Trading and Writing from Singapore.

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