Over the next few weeks the details and implications of the Trump Presidency will come into greater focus. At a minimum, expect tax cuts for individuals and corporations and significant infrastructure spending to be unveiled. Both of these policy initiatives will significantly add to the deficit in the short-term. Despite the significant sell off in Treasury bonds during the fourth quarter, I would remain defensive.
In the week ahead, investors can expect headlines to be dominated by the Trump cabinet choices. On the economic front, we get quite a bit of economic data, including the releases of monthly Retail Sales and the Consumer and Producer Price Indices. Look for strength in the upcoming data that would continue to reinforce improving growth and an uptick in inflation.
I anticipate more choppy trading action in stocks but with a bias for the indices to move higher.
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