20 January 2017 – Trump the new President.

It was a day Trump was sworn into the office of White House.

Nothing major change has occurred within the last week. Pound sterling jumped back after May’s statement on Brexit. She said there will be no deal with EU for access to the single market. Which means after Article 50 is triggered by the Parliament Britain will have to negotiate trade deals with EU over again. That will take a long time and require lots of work. My initial thoughts are It will not be easy for the UK to negotiate trade deals more favorably than they are right now. Example to leave the EU has to be made to other countries which would consider leaving later. Therefore. I have a confidence that Brussels will make May’s government hell. Furthermore, Michel Barnier who is a chief EU Brexit negotiator is a tough man. He won’t let Britain take the bigger pie. After March, as more news comes in, it will be easier to determine the future of Uk economy but I do not think pound will enjoy the ride in the long term.

Gold seems to keep rallying for the past week as uncertainty is at its peak around US economy. Market participants have started to rush for safe havens like gold as they will wait for Trump policies.

Oil has been up or down between 50-55$ during the past week. OPEC met in Vienna on Sunday and declared 1.5mln bpd of 1.8mlb bpd has been cut already. That is a good news and I have an inclination to keep my long positions for now.

I have both long and short positions in US stocks. I covered my short position in Bristol Myres after making more than 10% when the company had a problem with approval of its two drugs.

The future direction of Yen is still cloudy for me as It depends mostly on a dollar for now rather than any economic policies that are going on in Japan. Therefore, my perspective approach to currency pair should be short or long dollar rather than a perspective of short or long Yen.  Despite the fact of uncertainty I am long on the dollar and short in Yen due to the long run direction of the dollar.

I also shorted bonds at the small amount last week. I believe investors’ rush to the bond has stopped around a  week left to the Presidential inauguration. Therefore, considering the fact of the rate hike for this year if the economy is in growth, I believe bond prices will decline. However, the strong alert mind is required in these months. FED’s eyes are not just only on economic data but also on Trump policies. Therefore, they are cautious on rate changes.

My personal belief is Trump despite all the negativity on the internet, will try to “make America great again” by bringing jobs. He will at least try and move policies in that favor. Trade deals and negotiations will likely occur, probably taxes, tariffs on imported products and loose policies for exports. If the dollar gets too strong he might even adopt policies to weaken it. What matters is Trump does what he promised to Americal people.

Therefore, will all uncertainty surrounding the market, I am more cautious but believe gold will rally more with oil as well, fall in bonds is more likely.

12-jan-20-jan-2017

 

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