Wednesday, January 11, 2017
Following President Obama's final public speech as POTUS, the market now looks toward new declarations from a new era. President-elect Trump is scheduled to give his first formal news conference at 11am ET today, in which he plans to detail his economic plans for his first 100 days in office and beyond.
Considering the vast chasm between the outlooks of Obama and Trump, there are fundamental issues market participants are interested in hearing about, and in what order. Corporate tax reform, deregulation, immigration issues and repealing Obama's landmark ACA healthcare policy are among the giant boulders analysts expect Trump to address rolling today. So which comes first?
Many believe pushing through a lower corporate tax rate is the first step his administration will take. This would obviously be a boon to Wall Street as it will grow the top-line of publicly traded companies across the board. It would also spur initiatives toward repatriating corporate incomes from foreign lands across the globe back here to the U.S. This seems to be the methodology toward enhancing domestic revenues as they allow corporations to keep more of the money they earn.
We may also see an aggressive stance toward repealing the Dodd-Frank law, which was constructed in the wake of the Great Recession by way of limiting banks' activities in the name of protecting consumers' best interests. Cutting back on bank regulations would also amount to opening the spigot toward easy new cash flowing into the market.
More than any other issues, these are the low-hanging fruit investors have been counting on since the Trump rally began almost immediately following the November 8th election. That there has been hesitation since the final trading week of 2016 in continuing to bid up equities speaks directly to the unknown - whether or not this will indeed be he first tack President Trump takes upon his inauguration next week.
That said, we also expect to hear from Fed Presidents over the next couple days, which would speak to the other side of financial policy: New York President William Dudley is scheduled to address Federal Reserve policy in 2017 at a symposium in his home state at 1:20pm ET today. Tomorrow, we will hear from no fewer than four other Fed Presidents - Harker, Evans, Lockhart and Bullard - before capping off with a speech by Fed Chair Janet Yellen tomorrow evening.
Thus, by this time Friday we should have cut through much of the fog that currently sits in front of our new administration. Right now the over-under on Fed rate hikes is three - an additional 75 basis points from current interest rate levels. For sure these upcoming speeches will be parsed thoroughly by those who get paid to do such things. So please stay tuned…