Twenty-Four Days into a New America

Years from now, historians will put into perspective the transitional changes that began a mere twenty-four days ago. They will have the luxury of hindsight, with knowledge of the outcome. They will be able to see the cause-and-effect pattern that resulted from the policies, which were implemented by an untested businessman, who rose to the most powerful position on earth.

They will know, with absolute certainty, the answer to the most important question Americans, as well as global citizens, face in 2017: whether or not America’s 45^th president was an effective president who brought about positive changes for its citizens as well as the world at large.

They will know whether or not the massive responsibilities inherent in being a president will have tempered his ego, and softened his stance on many divisive policies he spoke about implementing during the campaign. They will know whether or not President-elect Donald Trump was able to use his, “Art of the Deal,” to result in positive changes for America and the rest of the world. They will have clarity to replace the absolute uncertainty that we all currently face.

That being said, over this last three weeks, we have begun to see this new presidency develop as he selects key members of his team and cabinet. These individuals will guide and implement the policies he will set forth once in office.

President-elect Trump ran on a platform of change; to shift power away from the special interest groups and lobbyists and have the government more responsive to its citizens. He promised to cut taxes, be more responsive to businesses and the regulations, and committed to a major infrastructure program. This is set to ramp up fiscal stimulus for the first time in many years.

It is these promises and campaign pledges which have created this short-term optimism; a honeymoon period that will end on January 21. Until then, traders and investors are channeling this optimism, which in turn has driven US equities to an all-time record high and the US dollar to strength not seen since 2003. This optimism is also putting extreme pressure on the precious metals markets, taking gold prices to a 10-month low, resulting in a loss of much of the yearly gains in the last three weeks.

If Donald Trump has difficulty succeeding with his promises, we could see safe haven investments such as gold not only find support near the recent lows, but also move into a unprecedented price increase not witnessed since 2008.  If President-elect Trump is able to convert his campaign promises into policies, we could see safe haven investments such as gold continue to trade under pressure for the better part of 2017.

Inasmuch as uncertainty is the underlying framework as this new America emerges, there is hope and optimism that has been missing from the American fabric for many years. Only time will tell whether or not this new optimism is warranted or simply a belief based upon the knowledge that the alternative outcome is unthinkable, with devastating repercussions in the United States and abroad.

Wishing you as always, good trading,