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Last week was an incredibly busy one, that despite the lack of economic data saw markets take out big final technical and psychological levels. We had GDP from the US and UK, President Trump signing executive orders like they were going out of fashion, and a Supreme Court ruling on Brexit in the UK. So let’s take a look back at the 3 things we should remember from last week.
1. President Trump is the same as outspoken civilian Donald Trump
From clipping the wings of the Environmental Protection Agency and backing the Keystone XL and Dakota access pipelines, to building “The Wall”, it’s safe to say that new President Donald Trump has been busy in his first full week in the Oval Office. It’s also safe to say that the President plans on being exactly like the man that fought a hard and bitter election campaign.
However none of this can come as a surprise to traders as, what President Trump is doing is following through on his election pledges, a concept that could well seem quite alien to many politicians around the world. The president led an election campaign dominated by immigration and giving jobs back to the American people, so by signing executive orders on immigration, building the wall and the Keystone and Dakota pipelines he has single headedly delivered on promises in his first week. The markets should be ready for a President that isn’t going to wait around for the red tape to be completed, he’s going to act now.
2.Brexit WILL happen
This week we saw the high court battle in the UK over the legality of Brexit finally come to an end as the supreme court ruled that the UK government had no grounds for appeal against the original decision. SO yes this does mean that in order to trigger article 50 by the end of March, it has to be voted through in the House of Commons by MP’s.
The vote will go to parliament in the next month or so and WILL be voted through by MP’s. The reason for this is purely political, in most constitutes in the UK the electorate have voted to leave the EU. So any MP who is seen to be going against the will of the people will have no chance of getting re-elected and will be lashed as being opposed to democracy.
3.The Dow finally breaks 20,000
We finally saw Dow break the key 20,000 level on the upside for the first time last week, after weeks of posturing and false moves. The move finally came after a brief move to the downside as the world thought the rally was over. However some strong earnings from some big companies in the US, helped by a busy first week for Donald Trump meant that we easily broke through the barrier on Wednesday last week.
After breaking below 19,700 many (including myself) thought that this rally was done, and that we could start to focus on the unwinding of long positions. However the strength continued and led the market through. So what’s next? If Donald Trump has anything to do with it then it could well be higher, however beware the profit takes bringing things lower.
