As every trader will tell you, it’s a lot easier to pontificate about the market outlook than it is to actually execute your vision.Â
Nowhere was the Trump rally more evident than in the currency market, where the greenback went on a tear from Election Day until just before the holidays.
But here’s the thing, the USD/JPY which is the purest proxy for dollar confidence, has not made a fresh high since December 15th. In fact, last night, it saw a vicious selloff in Asian session trade, dropping more than 200 points from Monday’s highs.
The selloff came despite a decent Non-Farm Payroll number last Friday, which saw average weekly wages rise by 0.4%. Wages are the absolute key to both U.S. economic growth and to dollar strength going forward.
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| As unemployment declines, America’s economic growth now depends upon increasing wages. |
With 95% of job seekers now employed, the issue for the U.S. economy isn’t jobs — it’s money.
Which brings me to the recent market price action. The unifying theme across equities, bonds and currency is stall. All three assets are stalled just below the recent highs. The Dow can’t break 20,000, the 10-year U.S. Yield can’t rise above 2.5%. And the USD/JPY is well off the 118.66 highs set in mid-December. The general rule of trading is when news is positive but price action is negative, you should trust the price action.
The market euphoria is clearly wearing off because traders now want to see hard data before they commit fresh capital to the pro-Trump trade. Tomorrow, President-elect Trump will face the media in a formal press conference for the first time since July. Most of the questions will likely be political in nature, but it’s how Mr. Trump addresses questions on economic policy that could have the biggest impact on markets.
The Trump rally was kicked off precisely because Mr. Trump instantly dropped the most abrasive political points of his platform in the November 9th post-election speech and focused on economic reform. If that’s the message he brings to the press, the flagging Trump rally could revive across all assets.Â
Happy Trading,
Boris
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“The Trump rally was kicked off precisely because Mr. Trump instantly dropped the most abrasive political points of his platform in the November 9th post-election speech and focused on economic reform.” Really? And how do you KNOW this?
Change is difficult for most of us including countries cultures corporations. Learning to live with less and value each breath and heartbeat as a gift. From here it is up to each one of us to learn new skills and improve the ones we have. Work hard. Be loyal. Take care of ourselves and each other. Find the real joy in life…charity
‘With 95% of job seekers now employed, the issue for the U.S. economy isn’t jobs — it’s money.’
Boris
It is a number of things but the job participation rate needs some work on it. The dampening effect for me has been Mr Obama trying to find a legacy. What will kick start things for me is when he goes and can’t do any more damage.
yes howard,Im glad you mentioned job seekers,there s still millions looking but there are none.Look at the food stamp hand outs,I agree Obama just wasted 8 years of his life,he should have grown oranges,we would have thought that usefull.I hope and pray Trump does the job but everybody seems to hate him,even his own party cos he is not a polittion,but go Trump drain the swamp.Im not even bloody American.
I would like a definition of damage. Check the records. The economy of trickle down creates big problems. Employment, industrial production, real sales and real income have done much better during Democratic presidents terms. Debt however, has risen greatly due to the severe recession that followed W’s term. Obama had a choice. Let the whole thing collapse or try to save it for another day. In my mind, he should have let it collapse to show the people what trickle down actually does. I’m sorry but this whole mess won’t get resolved until the 70% of the U.S. economy (consumer spending) is robust. In order for that to happen, wages must rise without prices going up at the same time. Everybody blames Obama for the health insurance costs. I’m sorry but the free market system doesn’t work for healthcare. Hasn’t for all of my life. Insurance premiums for myself and family have risen each and every year for four decades and the increases are always higher than the rate of inflation and in some cases, way higher. When the increases were not as startling, deductibles went up. With no viable option for the lower and middle class, the sky’s the limit when it comes to prices for medical care. Donnie (I voted for him) promised much better healthcare for way less cost. I’ll believe that only when I see it. I don’t think we’ve seen the end of damage. More debt and a rising dollar won’t help us. Well, unless the man just writes it off as he has done all of his life building an empire with little risk to him but tons more risk for the people he hired to complete the work. I’m not convinced things will get better very soon.
I would sure like to hear from someone. Will I be contacted once Trump takes office?
Please answer this question. If you can not answer this simple question, then take this question to Martin
Love it . Thanks
Thank you Boris, interesting read, informative and succinct.
“with 95% of job seekers now employed” not to mention that 20% of the work force have given up trying.
Thanks