Markets jitter over uncertainty around the new Trump administration as the new President shows policy action this week

President Donald Trump made a brief but heavy-handed 16 minute inauguration speech on Friday which nested pure populism within his new brand of nationalism. Trump painted a grim picture of the United States, but insisted that his presidency would be one of the people’s and that the government has been restored to the “forgotten men and women of America”. His repeated phrase of “America First”, in all aspects from defense to trade, will set the tone for his goals and actions in 2017.

Over the weekend, massive marches in major cities across the U.S. and the world sent a message of defiance to the new Trump administration. Following these events, Press Secretary Sean Spicer held a bizarre first press conference in which he repeatedly lied about crowd sizes at the swearing-in ceremony and chastised journalists several times. The stage is set for an uneasy relationship with the media, not unlike the campaign.

President Trump made a series of remarks at CIA headquarters in Langley, VA, which former CIA Director John Brennan labelled as “despicable”.  The speech consisted of self-aggrandizing statements, complaints about the media, and hyperbolic claims of support for an intelligence community he had publicly ridiculed weeks prior. Trump also insisted to a gathering of CIA officials that the US should have “kept the oil” during the Iraq war. The stunning suggestion amounts to a violation of international law. These incidents preview the two sides of President Trump: the grandiose, reactionary populist and the business-savvy negotiator behind closed doors. It will be necessary to parse his public-facing rhetoric in a separate context from real policy-making decisions and private negotiations.

Trump’s first order of business Monday centered around international trade and business regulations. After meeting with business leaders at the White House, he announced that he would attempt to reduce government regulations by at least 75% and will aim to create a border tax on companies which move production overseas. Leadership from a range of major corporations were present, notably: Ford Motor Co., Lockheed Martin Corp., United Technologies Corp., Under Armour Inc., United States Steel, and Johnson & Johnson. Michael Dell and Elon Musk were also present.

Trump also signed an executive order signalling a withdrawal from the massive Trans-Pacific Partnership trade agreement, or TPP, which he inherited from the Obama administration. On the campaign trail, popular sentiment had pushed both Trump and Clinton to publicly denounce TPP and cast the agreement as harmful to the American worker.  It will be interesting to see how this decision plays out with Democrats, as their constituencies of union leaders and labor organizations do not support TPP.

The North American Free Trade Agreement, or NAFTA, is still a target of the Trump administration. Trump indicated that he still plans on renegotiating this trade deal, but there is uncertainty over how this will pan out. Trump will need to balance his populist, workers-first rhetorical promises with global business interests.

Two other executive orders were signed today. One was a freeze on government federal hiring- except for the military. The other was a ban on federal funding for any non-government organization which perform or promote abortion services.

Following mixed results from corporate quarterly reports, along with uncertainty over the reality of a Trump administration’s policies, indexes are trading lower today. Investors are increasingly weary of the post-election rally, and fear that it will reverse if the markets do not see specific details around fiscal planning.

The DJIA is currently down 0.35% at 19759.43, led by losses from Boeing (BA) and General Electric (GE). The Nasdaq was hit by a biotech sell-off, dipping 0.37% to 5535. The S&P 500 is currently trading at 2260.13 which is also down 0.49% from the open. Energy shares in this index were negatively hit by slumping oil prices.

Using the ^GSPC symbol to analyze the S&P 500, our prediction model shows a selloff approaching with consistent downward vector values climbing towards 2%.  The predicted close today is 2259.58, with predicted support and resistance at 2251.40 (± 5.95) and 2267.89 (± 6.00), respectively.  

Upcoming Events and Reports

The nominee for Secretary of State, former Exxon Mobil CEO Rex Tillerson, has just received backing from Sens. John McCain (R., Ariz.) and Lindsey Graham (R., S.C.). Although there are concerns over Tillerson’s relationships with senior Russian government officials, he is expected to be approved.

President Trump will be meeting this Friday with U.K Prime Minister Theresa May. Prime Minister May is currently overseeing the U.K’s departure from the European Union, otherwise known as Brexit.

34 components of the S&P 500, as well as a handful of Dow components, are scheduled to report later this week.

Oil

Oil prices continue to trade lower, with the most current concern being over U.S output- particularly shale production. The initial OPEC agreement boosted crude oil prices to the point of profitability for U.S drillers, which they are taking advantage of, but this renewed activity is dragging the per-barrel price down again. Baker Hughes reported a one-week increase of 29 rigs, the largest increase in that time period in almost four years and creates a total of 551 active rigs. This is the highest active rig count in 14 months. Currently, crude oil futures are down 0.94% from the open at $52.72.

Looking at USO, a crude oil tracker, our 10-day prediction model shows strong sell-off signals. Although we see a 0.05% positive vector value today, the consistent downturn reaches toward 3% with some oscillations. The fund is currently trading at 11.3, up 0.79%. Today’s prediction sees support at 11.27 (± 0.05) and resistance at 11.62 (± 0.05). The predicted close for today is 11.45.  

Gold

Gold prices are up against a weakening U.S dollar, as investors move to the perceived safe haven while waiting for concrete information about the Trump administration’s range of policies. Gold futures are currently up $10.60, or 0.88% today at $1215.50 a troy ounce.

Using SPDR GOLD TRUST (GLD) as a tracker in our Stock Forecast Tool, the 10-day prediction window shows four days of slight sheds, followed by positive corrections.  The gold proxy is currently trading at 116.02, up 0.84%. Today’s predicted low is 114.07 (± 0.26) and the predicted high is 115.67 (± 0.26). The predicted close today is 114.90.  

Treasuries

The 10-year yield of treasury bonds have slipped to 2.435% from 2.467%. The government bonds market has been erratic after a post-election surge which had investors anticipating rapid economic growth and inflation under Trump. Using the iShares 20+ Year Treasury Bond ETF (TLT) in our Stock Forecast Tool, we see strong signals for a potential sell-off.

TLT, an ETF which tracks 20+ year bond returns, is currently priced at $121.6, which is up 1.38% today. The predicted close today is 119.59 with a low and high of 119.06 (± 0.22) and 120.07 (± 0.22), respectively. Negative vector figures gradually rise toward 4% in the next ten days, relative to today’s conditions.  

Volatility

The CBOE Volatility Index (VIX) is up 6.67% today at 12.31. Although we see a decrease today and tomorrow, the remainder of the 10-day prediction window shows consistent increases which strengthen at the end of January.  The predicted close today is 12.16. Today’s predicted lows and highs are 11.41 (± 0.15) and 12.53 (± 0.17), respectively.

Other news

The Securities and Exchange Commission is opening a probe into Yahoo’s reluctance to report two massive data breaches to its investors. Yahoo Inc. will be reporting quarterly results after the close today.

Foxconn Technology Group is interested in building a display-panel production facility in the United States. The project would be part of a combined effort with Apple Inc. and may create up to 50,000 new jobs.

Apple Inc. (AAPL) has filed a $1 billion lawsuit against chip-maker Qualcomm Inc. (QCOM) for allegedly demanding onerous terms within their business dealings. Qualcomm shares are currently down 11.41%.