6th February 2017

It seems investors spent much of last month, particularly since President Donald Trump’s inauguration two weeks ago, getting a sense of the policy riffs coming out of the new administration. Thus far, we sense that the pre-inauguration euphoria centering on what the markets were expecting to see, i.e., tax reform, infrastructure spending, higher inflation and regulatory relief (otherwise known as the “reflation trade”) has veered away towards other policy initiatives like protectionism and immigration -- all coming our way in the form of rapid-fire executive orders. Granted, many of these initiatives were ones that President Trump campaigned and won on, and to his credit, he is delivering on his agenda, or at least trying to, but not in the order that markets were hoping to see. As a result, the dollar has been one of the front-line casualties in Trump’s “priority realignment”. In this regard, the greenback has fallen by its largest monthly amount in more than three decades in January and has now almost rolled back in its entire “Trump bump” that set in since the November 8th election. Not helping the greenback either this past week, has been a rather standoffish policy statement put out by the Fed that seems to have deferred the possibility of a March rate move