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An Investor’s Guide to Trump’s First 100 Days

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100 days. A rather random period of time by which to judge a presidency. The metric came about thanks to Franklin D. Roosevelt’s flurry of New Deal laws in his first 100 days. Studies have indeed found that it’s legislative action tends to come in one’s first 100 days.

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At the time of writing, Trump’s approval rating is 43.1 percent – a historically poor return this early in a Presidency. Despite the lack of support, Trump has signed 30 executive orders into law.

Many complaints have been lobbied against Trump’s economic actions. Trump undid a plan made under President Obama to decrease the cost of mortgage insurance for working, middle-class homebuyers. Between 750,000 to 850,000 Americans therefore face higher costs in 2018, the National Association of Realtors conjectures.

The lack of subsidy for mortgage insurers could weigh on their stock price. Private mortgage insurers include Genworth Financial, MGIC Investment Corp., Radian Group Inc., PMI Group Inc., Old Republic International Corporation. Of these, PMI group has a comparably small market capitalization ($5.1 million), thus making it a volatile option (though how much further can it fall at .03 cents?). Moreover, Genworth has already begun to decline. Currently at $4.04, down from $4.10 in the last few days, the price reached its nadir for thus far in 2017 on January 30 at $3.30. It could fall further yet if Trump pursues other, similar policies.

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Trump’s Treasury Department nomination, a Goldman Sachs partner and hedge fund manager – who some have dubbed the “foreclosure machine”  – could bode well for industries across the board. For instance, Steven Mnuchin has stated he is “not at all” concerned about the potential shocks to the labor market automation might create. He has posited such concerns won’t be relevant on a timeline of  “50 or 100 years.”

A December report from the White House, however, cited studies which estimate that automation could affect between 9 percent and 47 percent of jobs over the next 10 to 20 years.”

Also read: One Thing is Certain, You Will Lose Your Job

“If President Trump really does push companies to base more of their production in the U.S., then those that specialize in robotics and automation will probably be the winners,”  

says Paul Diggle, senior economist at Aberdeen Asset Management, in a research note.

“Companies won’t automatically employ more Americans. They will rethink their strategies and some will inevitably look to automation as a way to avoid the higher costs of employing U.S. workers.”

Robotics and automation “is where the opportunity really lies for the U.S.,” Diggle says.  

“The U.S. can continue to dominate the world in the development of the automation and robotics technology which all companies are scrambling to embrace.”

That bodes well for Google and Amazon. The internet search engine has been in robotics since at least 2013, and has invested in eight robotics or artificial intelligence firms. Amazon purchased the robotics company Kiva.

Trump’s billionaire Advisor on Regulatory Overhaul, Carl Icahn, could pose a conflict of interest wherein arbitrages to trade are available. He is chairman of developer, manufacturer and supplier Federal Mogul, and his advice as czar could thus benefit tied industries: automotive, commercial, aerospace, marine, rail, agricultural and power-generation applications.

For instance, Icahn has already cheered on Trump’s take on renewable fuel rules. The president nominated Oklahoma Attorney General Scott Pruitt, a staunch oil industry supporter who is likely to loosen regulations including renewable-fuel mandates, including credits linked to Renewable Identification Numbers (RINs). Icahn said Trump consulted with him to pick Mr. Pruitt. New EPA renewable fuel rules could have implications, and ultimately prove a boon, for an oil refinery in which he owns a stake, CVR Energy.

Trump’s Regulatory Overhaul, in general, could boast well for financials. Jamie Dimon thinks operational risk capital should be “significantly modified, if not eliminated”. U.S. banks hold around $200 billion in operational risk capital, the CEO says, lamenting that, should a bank withdraw from a business that created the associated risk, it will still be required to hold the capital.

The Dallas Morning News reported that Texas cattle ranchers represent the “first casualty” of Trump’s “blundering, blustering trade policy.”

Contributor Richard Parker writes:

“By threatening a trade war with Mexico within days of inauguration, the president helped trigger a slide in cattle futures. Mexico is a major export market. By sinking the Trans-Pacific Partnership, the new administration cut off long-sought access to the Japanese market. Now banks have raised the conditions for collateral for loans for ranchers.”

It’s not easy to short cattle ranchers, but you can short the stocks of Farmland Real Estate Investment Trusts, which acquire farmland and then rent that farmland to farmers. Keep an eye on Farmland Partners Inc.

The main beneficiary of Trump’s increased military spending, wealthy military contractors and Pentagon elites, could benefit from Trump’s hawkish rhetoric alone.

The commercial side of the war stock businesses dependent on war have generally sagged due to economic recession.

Biotechs create vaccines and treatments to fight in the face of biological terrorism. But tangible benefits from the research is not easy to come by.

The rebuilders are sent in after a war to reconstruct. Projects run into the billions of dollars. Measuring long-term growth is not easy.

Investors tend to watch these stocks when the vector of war crops up on the radar:

http://money.cnn.com/pf/features/lists/warstocks/

Furthermore, Boeing has developed a good relationship with the president. Lockheed Martin has been cited as a winner thanks to Trump’s defense budget, as has Haliburton. If the defense stocks are doing well, then traditional safehaven gold could hedge geopolitical instability.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Justin O'Connell is the founder of financial technology focused CryptographicAsset.com. Justin organized the launch of the largest Bitcoin ATM hardware and software provider in the world at the historical Hotel del Coronado in southern California. His works appear in the U.S.'s third largest weekly, the San Diego Reader, VICE and elsewhere.




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Analysis

Daily Analysis: Oil Extends Rally as Nasdaq Leads Stocks Higher

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Friday Market Recap

Asset Current Value Daily Change
S&P 500 2749 1.38%
DAX 12,483 0.18%
WTI Crude Oil 63.58 1.29%
GOLD 1330.00 -0.16%
Bitcoin 10,14 -0.09%
EUR/USD 1.2295 -0.28%

US equities built up some bullish momentum towards the end of the week, ignoring the technical damage that the volatility-crash caused, and the major US indices rallied into the close today, squeezing the shorts. The Nasdaq, which led the rally as we expected, took out the key 6850 level in late trading and added another percent to, incredibly enough, finish only a hundred point of the all-time high.

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NASDAQ 100 Futures, 4-Hour Chart Analysis

Should the tech benchmark retest the high next week, it will be amid very strong negative divergences, but hey, those divergences have been building for months now. The rally in equities was boosted by the dip in Treasury yields, especially at the long end of the curve, while Amazon continued ot lead the charge, closing right at the historic $1500 per share level.

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Russell 2000 (Small Cap) Index, 4-Hour Chart Analysis

The advance in the Dow and the S&P 500 is much less convincing and with small caps also lagging the tech-behemoth juggernaut, we remain skeptical regarding the sustainability of the move. That said, if the broader indices stay above the key levels, we will be trading the long side in equities, even as from an investment standpoint, valuations are still way above acceptable.

Forex Markets and Commodities

The lackluster performance of European and Asian stocks adds to the negative divergences, especially as the Euro stopped appreciating against the Greenback, and that should be helping stocks of the old continent. Of course, the DAX and the EuroStoxx 50 could play catch-up next week, barring another surge in the common currency.

EUR/USD, 4-Hour Chart Analysis

The most-traded forex pair remains in a short-term downtrend, as it failed to recapture the previously broken rising trendline, and the commodity related risk-on currencies also remained under pressure. The Canadian Dollar did bounce back off yesterday’s 8-week lows, boosted by the much hihger than expected inflation release and the jump in the price of crude oil.

USD/CAD, 4-Hour Chart Analysis

Oil benefited from the positive shift in sentiment, while the Syrian situation, which took a backseat in the headlines, still supports the rally. The Japanese Yen and gold were stable amid the risk-rally and that adds to our suspicions regarding the upside potential form these levels.

Cryptocurrencies

The segment started out the day with a strong bounce that carried the major coins higher by around 10%, but given the recent steep short-term pullback, even that wasn’t enough to turn the tide, and the day ended with an (almost usual) sell-off after the US close. Despite the recent volatility, the overall picture is still encouraging, with most of the majors being safely above the crash lows, likely in a new bullish cycle that has the potential to last for several more weeks or even months.

While new all-time highs are it guaranteed following the 60-70% declines among the largest coins, but even without those, plenty of upside potential is left for investors. With that in mind, investors should hold on to their coins and even add to their holdings on the short-term dips like the current one.

ETH/USD, 4-Hour Chart Analysis

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 115 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Market Overview

Bitcoin is Clear

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It’s not often that drama from reality television influences the stock markets but I suppose it’s one of the hallmarks of the new world we live in.

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For those of you who haven’t heard yet. Kylie Jenner sent out this tweet…

…and SNAP stocks did this…

The follow-up apology didn’t seem to help much though.


Love or no love, it’s pretty clear that investors are following these personalities fairly closely and taking notes.

@MatiGreenspan
eToro, Senior Market Analyst

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Today’s Highlights

  • More Market Funk
  • Bitcoin is Clear
  • CME Bitcoin Expiration

Please note: All data, figures & graphs are valid as of February 23rd. All trading carries risk. Only risk capital you can afford to lose.

Traditional Markets

The market funk continues. All the indicators are totally sensational and correlations are way-out.

The Dow Jones went up and the Nasdaq was down. This morning the Asians did great but Europe is starting out weird.

Things are just kind of all over the place. There weren’t really any progressions in Volatility or the 10 Year Yield. Both kind of just coasted through Thursday.

But hey, today is Friday. So we could get some action going into the weekend. Especially with some heavy fed activity planned for this evening.

Of course, the only FOMC member traders really want to hear from at the moment is the newly appointed Jerome Powell, who will be giving his first interest rate announcement on March 21st.

Bitcoin in the Clear

The community celebrated yesterday as the bitcoin mempool was cleared for the first time in months.

Here we can see that during the peak of the FOMO from December 8th util January 21st, the bitcoin network was backlogged with more than 100,000 unconfirmed transactions at any time.

This comes as the adoption of both Segwit and the Bitcoin Lightening Network have been dramatically increased.

In short, the scaling issue that we’ve spoken about often in the last few months may finally have a solution. Of course, we’ll only know for sure once we give it a real test.

For now, transactions rates are at the lowest point since at least May of 2016, with an average of only 2.14 transactions per second (TPS) over the last 7 days.

It should be noted however that adoption of the Lightning Network will actually reduce the TPS rates since Lightening transactions happen off of Bitcoin’s main chain.

Rather than adding each transaction to the main blockchain, trusted parties are able to transact freely with each other. They then send an aggregate summary of their transactions onto the main blockchain so that the rest of the network can update the final results.

Either way, it’s clear for now that there’s simply less activity on Bitcoin since the pullback. This can be confirmed by Google Trends which shows that interest in the world’s largest digital currency is now as low as it was in early November, which at the time was an all-time high.

Futures

Another thing to bear in mind is that the CME February Bitcoin futures contracts will expire today. Any positions that are not rolled over to the March contracts will need to be settled in cash on the Gemini exchange.

It should be noted that Wall Street is still taking it very slowly with bitcoin, and so far only 5,840 BTC have been traded on the February CME contracts.

Some people have pointed out that the price of bitcoin tends to dip around the time of the contract expirations, but I still haven’t seen enough evidence to support this theory.

For now, my tinfoil hat is still in the closet. Will let you know once I take it out. 😉

Have an amazing weekend!!

This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation. The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro. Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose. Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 34 rated postsSenior Market Analyst at Etoro.com.




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Analysis

Pre-Market: Stocks Refuse to Fall Even as China Takes Over Key Insurer

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Although it should have been a very quiet week in China, thanks to the New Year celebrations, the recent surge in volatility and the plunge in equities didn’t pass without consequences in the key market. Just shortly after effectively shutting down the Chinese version of the Volatility Index (VIX) (presumably to calm the markets…), one of the main actors of the monstrous financial web, Anbang, of the country had to be taken over to avoid a systemic event and stop the “creative” financial engineering that involved criminal activity (the shadow of 2008).

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China will likely need many more duck-tapes like this one if it wants to stop the largest credit bubble in human history to collapse, but for now, the solution could work. Equity futures edged higher since yesterday’s volatile close, and as the major US indices are holding up well, not far off last Friday’s highs, our bearish short-term view might have to be revised.

Nasdaq 100 Futures, 4-Hour Chart Analysis

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As we discussed before, the long-term uptrend is intact, and we expect at least a re-test of the highs even if we are in a large-scale top formation, but we thought that the technical damage caused by the crash three weeks ago would require more healing.

We are not turning bullish just yet, but today’s session could finally decide if we the BTFD-crowd is strong enough to turn the tide after the choppy drift lower this week. We are still focusing on the Nasdaq, as the broader market seems to be following the lead of the tech benchmark, and a move 6850 (in the Nasdaq 100 futures, and still the 2735 level in the S&P) would be a very positive sign for bulls.

DAX Index, 4-Hour Chart Analysis

The German DAX index is also showing some tentative short-term relative strength although it remains almost 10% below its all-time high, and it remains a strong negative divergence to be monitored.

Forex Markets Quiet

EUR/USD, 4-Hour Chart Analysis

The main pairs are trading in a choppy narrow range today after the strong move in the Yen and the drop in the USD yesterday. US Treasury Yields are edging lower today, helping the calm in equities and currencies, but on a bearish note, commodity currencies failed to rebound so far, and they were providing good signals since the crash. Day-traders should note that the Canadian Dollar will likely be very active again, with the Canadian CPI report coming out pre-market.

To sum the outlook up, we are still leaning on the risk-off side here regarding the short-term outlook, but we wouldn’t bet the farm on that, as there are mixed signals before the weekend.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 115 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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