Tuesday, January 31, 2017

We’d gone more than two months on a Trump Rally that had favorably priced in things like corporate tax cuts and deregulation, opening a clear path toward market gains. Eventually we saw a bid up to the coveted Dow 20,000 — something that had been considered a pipe dream so soon by a plurality of analysts.

This morning, however, based on a CNBC survey among economists, protectionist policies of the Trump administration are considered the biggest threat to the U.S. economy. A border adjustment tax is receiving a 45% negative rating from the analysts surveyed — especially regarding two of America’s biggest trading partners, China and Mexico — as a trade war scenario begins to emerge.

Especially now that we have seen aggressive actions from the nascent administration that, if transferred to candidate Trump’s promises on trade, look to radicalize the status quo. This is something the markets had not priced in, but are beginning to do so. Dow 20,000 is now in the rearview mirror — down another 43 points from closing yesterday below the psychologically pleasing 20K round number.

Q4 earnings results have also taken a down-turn ahead of the opening bell today: ExxonMobil (XOM Quick QuoteXOM - Free Report) , Under Armour (UAA Quick QuoteUAA - Free Report) and Pfizer (PFE Quick QuotePFE - Free Report) all reported disappointing results on the bottom line this morning. Under Armour in particular has been hard hit in the pre-market, down initially 28% (now around 24%) on the news, which also included a report that its CFO will be stepping down.

After the bell today we’ll see Apple (AAPL Quick QuoteAAPL - Free Report) report earnings results. Estimates of $3.22 per share on $76.2 billion represent a mixed bag from the year-ago quarter, down 6 cents per share but narrowly above Q1 2016 sales totals. The stock is up more than 9% since the Trump Rally began, outperforming the S&P 500 overall.

Mark Vickery
Senior Editor

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