QUOTATIONS:

  • I could see how the “fiscal” stimulus folks could have been disappointed by Trump’s first business day after the inauguration.  Rather than focus on improving growth, Trump spent a lot of time on things that could restrict growth (renegotiating trade pacts).”  (Jan 25 email)  We still see very few signs of stimulus.
  • the FOMC is probably full of Democrats, so they may be more likely to think negatively of what is going in the US.  So now that bearish FOMC tail looks smaller.”  (Jan 31 email)
Watch for new features in coming weeks.  
I am finalizing my regime change article for a magazine,
after which I can work on developing more web site content.

Weekly Essay – Trump’s “Master Plan”?:

[From time to time, I’ll write an article for Seeking Alpha.  Below is the summary of the article that was published on February 2, 2017.  To read the full article, go to seekingalpha.com.]

Summary
• We have seen the past few quarters how much the Trade Balance can affect GDP.
• Trump’s “puzzling” foreign policy actions are wholly consistent with reducing the Trade Balance with various counterparties.
• One of Trump’s strengths is negotiating, and he is using some classic negotiation tactics with various countries.

I discuss what he is trying to accomplish in the various parts of the world.  The article was very well-received by clients.  I had to “clean up” the language from when it first appeared in the CA Newsletter on January 29, but it will definitely give you some food for thought regarding what I believe Trump is trying to accomplish with some of his “unusual” actions.  CLICK TO READ THE REST OF THIS ARTICLE FROM THE SA WEB SITE

Next Week: I discuss the (tail) risks from a divided country.

Other Market Comments from the Delayed CA Newsletter:

From the News Takeaways SectionApparently, I am the Kiss of Death to trends.  Three weeks ago, I wrote about the surge in non-quarterly meetings, and it died and receded.  Two weeks ago, I wrote about the January rally, and it died and receded.  Last week, I talked about ED-FF spread widening, and it died and receded.  This week, I discuss Trump!  Settle down folks – just his trade policy. 

Trade Summary from the Delayed CA Newsletter:

TRADE THOUGHT:  I discuss how MXN sold off sharply from Trump’s trade rhetoric the past few months.  But Mexico should not have sold off in isolation.

FLIP TRADE UPDATE:  It’s an uncertain time, so I wanted to wait until we have a better feel for the markets.

OFFICIAL TRADE UPDATE:  We had a good first month of trading, just picking up small bits of value across a number of trades.  We took profit on two small trades.  In addition, I mentioned that I liked the very long end steepeners (again) because 2000 mile walls are expensive.  We took some profit on this (again) last week.

Forum Update:

The most notable post from the Forum was:

In the Game Theory and Trading thread, I discuss the importance of understanding what other participants in the market are thinking and doing.  This is especially important in a zero sum game like futures trading.  “Don’t just look at the tree (your trade)… see the entire forest. ”  CLICK TO READ THE REST OF THE POST ON THE CA FORUM

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