Whether you are Dem or Deplorable, if you trade currency you definitely want to be aware of what's going on in Trumpworld. Why? Because unlike Trump University, there's some real money to be made if you understand when and how markets will move when something politically significant happens.
Let's review.
Prior to the election, pundits such as Paul Krugman and the Brookings Institute were mostly convinced that a Trump victory would be deadly for stocks. Some even predicted a recession would happen if he were elected. Instead, "the S&P 500 has produced 49 fresh highs this year, an annual rate that’s been surpassed five times since 1946," according to Bloomberg.
Nov. 8 2016 was a wild night for currencies and futures as it became apparent that the impossible had happened. For all his talk about building a wall he managed to knock down the Blue one, grabbing traditionally Dem states the Clinton campaign (and many polls) had taken for granted.
At first, S&P futures dropped like a stone as the Euro and Yen gained bigly against the dollar. It seemed as if what most had predicted would come true; a Trump victory was deadly for stocks. But then, something strange began to happen. Futures and the dollar started making a comeback. The rout was completely reversed and things started heading in the opposite direction. Stock futures and the dollar ended up with big gains that day, a trend that continued into the middle of December. The dollar hit a high of 118.65 against the Yen on 12/15/16 and 1.0325 against the Euro. Trump Trading was on. From there, as the new information of trump's victory got fully priced in, stocks and the dollar resumed their typical relationship, with the dollar falling to a low of 1.2092 against the Euro on Sept. 9 while the yen reached 107.31 the day before as stocks continued hitting fresh highs.
So let's define:
Trump Trading is stocks going up while the dollar gains against the Euro and Yen. It happens when Trump and/or Republicans do something positive for his agenda, bringing new, non priced-in information into the market.
Regular stock trading is as it always was: Stocks going up while the dollar weakens.
To show this, let's have a look at what happened this past Thursday and Friday, October 19 and 20.
As you may be aware of, Trump and the Republicans want to get tax reform passed, something that's very favored on Wall St. It's politically crucial for them to pass this because if they fail, Republicans in Congress likely will get bounced out of office next year. On Thursday afternoon, strep 1 of passing tax reform happened: The Senate approved their budget resolution, making tax reform possible WITHOUT Dem help. This means it's all in the hands of Republicans now. In theory, the House will write the law, the Senate will approve and eventually, it will be sent to Trump for his signature.
What happened Thursday after the Senate approval was that Trump Trading started taking off as new, non priced-in Trump positive information came into the market. Futures rose as the dollar gained against the Yen and Euro, and the trend continued all day Friday.
So there you have the basic outline of how Trump Trading has been working as the 1st anniversary of his dramatic win approaches.
Let's review.
Prior to the election, pundits such as Paul Krugman and the Brookings Institute were mostly convinced that a Trump victory would be deadly for stocks. Some even predicted a recession would happen if he were elected. Instead, "the S&P 500 has produced 49 fresh highs this year, an annual rate that’s been surpassed five times since 1946," according to Bloomberg.
Nov. 8 2016 was a wild night for currencies and futures as it became apparent that the impossible had happened. For all his talk about building a wall he managed to knock down the Blue one, grabbing traditionally Dem states the Clinton campaign (and many polls) had taken for granted.
At first, S&P futures dropped like a stone as the Euro and Yen gained bigly against the dollar. It seemed as if what most had predicted would come true; a Trump victory was deadly for stocks. But then, something strange began to happen. Futures and the dollar started making a comeback. The rout was completely reversed and things started heading in the opposite direction. Stock futures and the dollar ended up with big gains that day, a trend that continued into the middle of December. The dollar hit a high of 118.65 against the Yen on 12/15/16 and 1.0325 against the Euro. Trump Trading was on. From there, as the new information of trump's victory got fully priced in, stocks and the dollar resumed their typical relationship, with the dollar falling to a low of 1.2092 against the Euro on Sept. 9 while the yen reached 107.31 the day before as stocks continued hitting fresh highs.
So let's define:
Trump Trading is stocks going up while the dollar gains against the Euro and Yen. It happens when Trump and/or Republicans do something positive for his agenda, bringing new, non priced-in information into the market.
Regular stock trading is as it always was: Stocks going up while the dollar weakens.
To show this, let's have a look at what happened this past Thursday and Friday, October 19 and 20.
As you may be aware of, Trump and the Republicans want to get tax reform passed, something that's very favored on Wall St. It's politically crucial for them to pass this because if they fail, Republicans in Congress likely will get bounced out of office next year. On Thursday afternoon, strep 1 of passing tax reform happened: The Senate approved their budget resolution, making tax reform possible WITHOUT Dem help. This means it's all in the hands of Republicans now. In theory, the House will write the law, the Senate will approve and eventually, it will be sent to Trump for his signature.
What happened Thursday after the Senate approval was that Trump Trading started taking off as new, non priced-in Trump positive information came into the market. Futures rose as the dollar gained against the Yen and Euro, and the trend continued all day Friday.
So there you have the basic outline of how Trump Trading has been working as the 1st anniversary of his dramatic win approaches.