Roller Coaster For Stocks As Trump Era Dawns

Up, down and now up again. Big-league. The stock market, the dollar.

Along with his incoming administration, President Donald Trump has promised sweeping changes to all manner of U.S. trade and social policy. And over the past few days, the markets have been on — if not a roller coaster ride — then a rocky road.

There are all sorts of reasons for the markets to react with some bifurcation. Along with uncertainty over policy, there have been worldwide protests and perceived missteps over communicating with the press and the public at large, from Trump himself via Twitter to administration officials at press conferences and interviews.

As a result, noted Reuters, the dollar found its way to a seven-year low just yesterday, with the currency trading lower against peers and the yen a standout amid the headlines, rising as much as 3 percent cumulatively just three weeks into the new year. The dollar index was off 60 basis points to start the week at 110.2, but more notable was the trading against the yen, at a low 113. This comes in the wake of comments this month by Trump that the dollar has been unsustainably strong on the world stage. A weaker dollar would stimulate exports, which would dovetail with job creation (firms need demand for their products to have reason to hire).

At the same time, there has been upward pressure on the dollar, at least seen in the months since the election as the expectations looked to spending here at home, noted the newswire.  Fiscal stimulus, along with tax cuts, would do much to push inflation higher, in turn leading to interest rates getting a boost and the dollar gaining strength in lockstep.

Meanwhile, Tuesday (Jan. 23) saw a bit of a rebound in the markets, as the Dow crossed back over the 19,000 mark as financials and materials firms saw rallies, while the broader S&P gained nearly 70 basis points, with enthusiasm possibly stoked by earnings.