With the new administration in full swing, one thing is clear – change is in the air. This week we saw Trump sign numerous executive orders. Now the question from investors is – what are the possible implications? Get all the details in this edition of Steady Investor’s Week…
Trump Pulls out of the Trans-Pacific Partnership – President Donald Trump signed a slew of executive orders this week, many of which significantly alter the status quo. Pulling out of the Trans-Pacific Partnership made the U.S.’s withdrawal from the trade deal official, but we already had one foot out the door on the deal. The implications are far-reaching, the full extent of them may not be known for some time. The U.S. had an opportunity with the TPP to be involved in trade deals with 12-nations in the Asia Pacific region, but the most important feature of the deal was having a presence in an area where China is exerting its influence and writing the rules. With the U.S. out, China may double down on its efforts to gain complete prominence in the region. Australia, which is more sensitive to dealings in the region given its proximity, called to move forward for the Trans-Pacific Partnership without the U.S. Other proposals brought forward this week by the new administration was a call to renegotiate NAFTA, a signed order calling for a hiring freeze on federal employees, and the notion of slashing business regulations by 75%.
Energy Gets a Boost, Too – another executive order signed by President Trump cleared the path for the Keystone XL and Dakota Access Pipelines, two controversial projects blocked under the Obama administration. There were also rollbacks on regulations and environmental rules that would have inhibited certain aspects of infrastructure projects in the space. Unsurprisingly, Energy shares rallied on the news.
Could OPEC Really Follow Through? – meanwhile, OPEC is surprising the world with its steadfast commitment to cutting global oil production. Early last week, OPEC and non-OPEC countries met in Vienna to discuss monitoring the deal, and the notes from that meeting were very positive. Producers are said to have cut oil supply by 1.5 million barrels per day, which represents about 80% of their targeted cuts. We would have been surprised with 50% compliance, so you can imagine how the market sees 80%. Should compliance with the production cuts continue, oil prices should remain stable.
Investors: Completely Disregard the Dow at 20,000 – we’ve written about this landmark a few times before, and this week the Dow finally hit that 20,000 mark. It doesn’t mean anything. The Dow is a price-weighted index for one, but index levels are relative and arbitrary. The market doesn’t pay heed to them, and neither should you.
A Major Brexit Roadblock – a U.K. Supreme Court ruling handed down this week determined that invoking Article 50 (to leave the European Union) must be brought before parliament. This means that triggering Brexit will have to go through two houses of parliament, which will likely mean plenty of infighting and dissention. As part of the European Union, meanwhile, the British economy has continued to display strong fundamentals and growth momentum. GDP grew by +0.6% in Q4, which is consistent with growth in the previous two quarters. Manufacturing and services activity has remained notably strong in the U.K. all year. British Prime Minister visited Donald Trump this week as well, no doubt to discuss the possibility of a free trade deal with the United States.
With Trump in office and numerous changes taking place, there is no better time to get an inside look into Zacks predictions for the new administration. Get a deeper look into the current state of the market and forecasts for 2017 in our just-released Stock Market Outlook Report. Download your copy today by clicking on the link below.
Disclosure