It’s going to be faith

3

It’s going to be faith.

Tonight Australian time Trump will prosecute the argument for his tremendous budget and provide some policy guidance. The actual speech by Trump will occur Wednesday morning for Australia (9 pm Wall Street Time). The Trump is expected to provide guidance relating to his policy and what and how he intends to spend on infrastructure.

The market is looking for deregulation, tax reform and this will be a very delicate operation. For example cross border tax policies relating to Mexico could have issues for some U.S. corporates.

So for the moment it’s a bit of froth and bubble. Equity markets are now going for 11 consecutive highs, however the perplexing issues are the muted gains, one of the lowest streaks since the 30’s, low volumes and a bond market that is not all that nervous given rates are at risk of rising.

At play is the Fed, what will the Fed do after the policy release. At issue are will Munis retain some of their tax free status, will Yellen raise rates in March and what will happen to health care.

On the day equities were a little stronger albeit on low volumes. The Treasury market was slightly weaker, and commodities were mixed. Oil was stronger whilst metals were weaker.

Aussie Market Today.

The Aussie equities should maintain the positive momentum and rally. Wednesday the market may have to come to terms with disappointment should Trump’s policies disappoint. Bonds should be weaker on the day. Credit was steady and should remain better bid.

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