State of the Stock Market Analysis for the Week Ending January 22nd, 2017 (Low-Key Week With An All-Time High 1-22-17) 
The inauguration has come and gone, and the United States has a new President that vowed very strongly on Friday to change things drastically. The new President Trump said that he will work for the American people and put America first every day of his term that is now underway. The stock market responded with a positive close on Friday, but for the week, the major indices were slightly lower, with the Dow and Nasdaq down 0.3% each and the S&P 500 was down 0.2%. The major indices are still holding their ground near the post-election highs, so it was a positive way to end the week.
As for the stock market and the new Trump Administration, the jury is still out, mainly because Trump still needs to fill quite a few cabinet positions, and it will take some time for markets to digest the multitude of changes that might be coming our way. Friday was a day for celebrations, parades, optimistic speeches and a few fancy tuxedo-laden balls, so major policy issues were pretty much on the back burner. It will be interesting to see what sort of tone Trump sets next week, so stay tuned, and let’s hope for the best.
Trump’s recent comments about the U.S. dollar being too strong set in motion some worries, especially because he blamed China’s weak yuan policy for hurting the U.S. There are also “wild cards” about Mexico, the EU and Russia that are circling. Thus, there should be no shortage of “new directions” for both politics and economics for the U.S. to tackle given Trump’s promises of big changes that will “Put America First.” This is why Trump’s new team will have a lot of pressure on it to make smart decisions and do the right thing.
Strategists seem divided over what direction a new Trump presidency will mean for the U.S. economy and the investment markets. Some strategists worry that we could possibly see trade wars break out, while others think that some of the Trump ideas will likely make great strides in improving the U.S. economy. We are already seeing companies step up to the plate and promise to bring jobs back home or just avoid sending anymore abroad. The problem is what happens if major trading partners get angry and “retaliate” economically.
There is also Trump’s infrastructure initiatives to “Rebuild America” by upgrading bridges, highways and airports. It probably makes sense to have a real estate President pushing on this front, but Trump needs to realize that politics can be a difficult place to go in order to get things done quickly. Trump does have a majority Republican House and Senate, but the question remains whether he will get the full support from entrenched politicians and interests that he attacked during his 18-month run for President, not to mention the Democrats who are still furious at Hillary Clinton’s loss.
The broader economy is still very strong, though, and we are seeing solid economic numbers, a strong housing market, and a big, optimistic rebound in the financial sector. Even the thought of rising interest rates is not spooking the stock market, and many economists think that higher rates will actually help the economy. Janet Yellen this past week even hinted at multiple rate hikes each year through 2019, so this will be one more “wild card” for investors to think about as we head into the next few years.
Investors are pleased, however, that for the meantime, the stock market has given a big “thumbs up” to the possibility of major changes. Yes, we have seen the stock market level out for the past month or so, but that was expected given the big run-up we witnessed following the election. Earnings are still pouring in, and they have been fairly good. We get a lot more numbers in the next couple of weeks, so fasten your seat belts and get ready for what will definitely make for an interesting 2017. Bulls are still hoping for a strong finish to January, so stay tuned and have a relaxing January weekend!
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