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How the actions of Trump could influence trends in the future markets?
So in order to analyze the current situation in the United States it is necessary to consider the condition of the present stock markets under the beginning of President Donald Trump.the Trump’s political policies mentioned in his inaugural speech are expected to cause increased fluctuations in the markets whenever it is a positive or negative impact. Nevertheless, it is still unknown what exactly he intends to achieve, especially if he plans to aim at […]
Market trends and how can Trump’s policies likely to influence?:
It would also be important to look into how the prospects of the new president, Donald Trump, would affect the current stock markets in the United States. President Trump’s policy, laid down in the inaugural speech, is likely to cause high fluctuations in the market, that may be positive, when supporting the actions made by the president, but negative in the case of opposite results.
While several aspects of his intentions are still uncertain, especially concerning the proposed tariffs and its extent, it still can be widely observed that such policy would have significant implications on the international trade. Presently, it is not well understood as to how this market changes and the following approach is susceptible to finding the main driving forces using available data. The trend affecting the U.S stock markets in the current period is most significantly defined by inflation.
The increase in the value of the stock market is as a result of inflation figures.
The market declined in the previous weeks but finally bounced back from the low that was witnessed in the December inflation figures. The information showed a decrease in the inflation rate compared to the rate of stagnation in November that prompted worries.
Inflation Data
Key Factor: Core Inflation
PIM’s greatest advantage was the reduction in primary inflation rate for durable items. This measure does not include food and energy, because they are more variable and sensitive to transient supply factors. This in turn provides a somewhat different view of the actual trend in the rate of price rises. A rate of inflation that has been rising for the past several months now emerged to be on its first decline although it remains higher than the targeted range of 2-3% set by the Federal Reserve.
Inflation Data
From the aggregate level of inflation indices, one can notice that the price of service and rent remain problematic while the inflation rate characteristic to the food basket appears to be stable.
Inflation Data
In addition, there are two other variables that the Federal Reserve considers before adjusting the interest rates:
● Sticky prices: These refer to the measures that are accorded prices that take longer to change.
● Trimmed mean inflation: This means eliminating extreme values in the overall inflation to give you a more realistic value.
Inflation Data
But both have fallen in December but still were slightly above the Fed’s preferred range.
Recently, Federal Reserve Chairman Jerome Powell has stated that any more rate cuts will not be possible until inflation firmly emerges. Despite the mentioned trends it is evident that present data is a problem.
Tariffs vs. Inflation: A Potential Conflict
Hindo also touched on Trump’s recent message of continuing his practices of protectionism through additional tariffs and fight against high levels of inflation throughout his second term. Duties of employees and objectives of the company can be competing in some cases we can see that these two are different objectives.
● Tariffs: This could lead or contribute to high costs hence increase in the inflation rate.
There is much emphasis towards control on inflation which poses some political implications and most importing firms might find it challenging to engage in deliberate inflationary policies through increasing the price of imported goods.
Sustaining these priorities may entail complex implications that can affect markets especially because they are possibly the most expensive markets in the world. These changes should therefore be closely observed by investors and traders in the process as it happens.
As we are at the mid of the month, markets are waiting for the figures in January. A further drop in inflation rate may further lead to new records on S&P 500, DJIA and Nasdaq Composite, despite the signals by the Federal Reserve at the end of the year. The Federal Reserve will not cut interest rates, especially considering the labor market is still good.
On that note, it will be economic information that is set to dominate as the 2025 progress continues. Thus, vital knowledge regarding the direction of the market would include being abreast with economic calendar releases.
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