Thursday, January 19, 2017

Trump Will Disappoint

I am reading articles about some of his intended budget cuts, and it is not going to be good news for the US economy.  I was expecting no budget cuts, massive tax cuts, some infrastructure spend, and a huge blowout of the budget deficit.  It looks like it could just be a big budget deficit, not a monstrous one.

As the days go by, I see Trump having less and less of an effect on the market, as his statements just don't have much teeth to them.  They seem to be a form of entertainment for him, not something that you can base his policy on.  The market will soon catch on to that fact and react less and less to what he says.

I don't see the crowd having high hopes for a rally after the inauguration, but I also see a lot of complacency building up as the volatility dies out.  That is usually a good sign that we'll get a little mini shake out, nothing serious, perhaps down to SPX 2240, about 1.5% down from here.  That would be enough to shake out some of the fast money.  I don't see the big dip from this level, as I don't see much exuberance on the long side.  It remains a 2015 type of market.  You will get choppiness at the top for the next few weeks, and then I expect an attempt at a breakout above 2300.

I see very little edge here either way, although if I had to choose sides, I would rather be short than long S&P.


Anonymous said...

any other markets you're looking at other than S&P500 (gold, oil, interest rates, etc.)?

Market Owl said...

Nothing much going on right now, I am looking at interest rates, but nothing imminent right now. Think February/March could be a time to enter long bond positions.