Trumponomics and Trumpflation

The whole world is still talking about Trumponomics, Trumpflation, Trump!

US flag
Source: Bloomberg

Although it is quite possible Donald received the greatest surprise himself by being elected.

D. Trump is talking of lowering the corporate tax rate from 35% to 10%. A 10% tax on profits held overseas will clearly have an implication for Apple going into 2017. However, Janet Yellen has commented that there is not much space for Donald Trump and his stimulus. Such are the dynamics of central bank and government.

With this type of speculation, the Dow remained flat, only being led by the Nasdaq heading into the close up 0.5%.

US housing numbers came in extremely strong at 1.32 million starts, an increase of 25%. This number could be an outlier and subject to some form of correction. But take the view, numbers, all of the numbers are going in the right direction. This includes inflation, interest rates and employment, with the US ten-year bond up a further 2.32% at 2.27% overnight.

The US dollar index value is something every trader will be discussing in the 2017, and it remained firmly over the key 100 level at 100.85 – a 13-year high.

The Aussie dollar continues its fall overnight, settling around 0.7409 – well below the key 75c level. This will contribute to price support in the commodities sector. The underlying metals received a boost, with copper higher 0.56% and iron ore up 1.56%.

Gold coming off $9.90 will see further falls in the Australian gold sector. Newcrest Mining is the most technically vulnerable, close to the key support level of $20.00.  The smaller players like Saracen, last at $1.05, is also looking soft with a key support level at $1.00.

The BHP ADR indicates $24.14 up from yesterday’s close of $23.95. Our closest neighbour, the Canadian TSX, rallied 88 points or 0.6%.

The call is for a higher open with the futures pointing up 12 points, indicating an index open of 5348.  While the Australia 200 is heavily weighted to the top eight stocks where yield still remains the play, opportunity remains in the technology and industrials.

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