President-elect Donald Trump has started forming his administration by meeting with outgoing President Joe Biden at the White House. This meeting symbolizes a peaceful transfer of power. Trump’s cabinet picks have caused debate, especially the nomination of Rep. Matt Gaetz as Attorney General, which received mixed reactions. Additionally, Trump nominated Robert F. Kennedy Jr. to lead the Department of Health and Human Services (HHS), drawing attention due to Kennedy’s controversial views on vaccines. These bold choices by Trump are setting the tone for his upcoming term.
The Volatility Index (VIX) was influenced by Trump’s win at the beginning of the week, leading to a decrease in the index. However, by the end of the week, the VIX stabilized around the 15 level due to controversial cabinet picks and weakness in U.S. equities, causing uncertainty. Despite concerns about Trump’s leadership decisions, market volatility remains lower compared to pre-election levels.
In terms of market analysis, the VIX found support at the critical 15 level, with potential for a rebound towards 17.5 if U.S. equities continue to decline. The Trump presidency is expected to lower the VIX as market confidence grows around business-friendly policies, but quick spikes in volatility may occur with the introduction of new policies, especially related to trade and international relations.
The Dow Jones Index fell last week as the “Trump Effect” faded, shifting market attention to Fed Chair Jerome Powell’s cautious approach to rate cuts. Powell emphasized the central bank’s patience in lowering rates due to strong economic growth. The Nikkei also struggled to break the 40,000-yen resistance, despite the USD/JPY testing higher levels. The market is preparing for a possible Bank of Japan intervention to address yen weakness and a potential December rate hike.
Oil (WTI) remained under pressure last week due to a bearish trend following Trump’s victory, coupled with a strengthening USD and increased supply from non-OPEC producers. Weak economic data from China also contributed to the downward momentum. Support at $67 held last week, but a break below this level is likely, presenting selling opportunities near $69. The Trump presidency is expected to boost U.S. oil production, potentially lowering prices and softening WTI prices due to a strong USD.
Bitcoin surged over 30% in the past month, surpassing $90,000 as the market eyes the $100,000 milestone. Trump’s pro-crypto stance and concerns about U.S. government debt are driving optimism. However, the market may be overbought in the short term, with a potential break below $90,000 triggering profit-taking and testing support at $85,000. Despite short-term risks, Bitcoin’s medium-term uptrend remains strong.
In conclusion, Trump’s victory is impacting various markets, with traders and investors closely monitoring his decisions and policies. The market is evaluating the effects of Trump’s presidency and the Federal Reserve’s potential rate cuts slowdown. Short-term strategies such as selling into weakness in the Dow Jones and Nikkei, as well as WTI, present trading opportunities. Bitcoin’s surge may offer short-term selling opportunities, but the medium-term outlook remains positive. Investors should stay informed on market developments and adjust their strategies accordingly.
