Anyone hoping President Donald Trump was going to get into anything specific on proposed fiscal policy or regulatory changes (financial or otherwise) will surely have come away disappointed from his address to a joint session of Congress. It was, predictably, long on rhetoric, short on substance. We now have to await the outline Budget, current promised for March 16th (or leaks thereof) before any more reasoned judgement can be formed as to both the specifics of Trump’s budget ambitions and the likelihood of Congressional support. Certainly markets have come away from Trump’s address exhibiting at least mild disappointment, with US Treasury yields and the US Dollar initially both a touch weaker from levels prevailing before he started speaking, before reversing to leave them both pretty much where they were following the boost derived from the earlier comments from NY Fed President Bill Dudley. Dudley’s comments that the case for tightening had become a ‘lot more compelling’ helped move the dial on Fed pricing for a March rate hike from 56% at Monday’s NY close to 85% (based on OIS pricing). The onus currently looks to be on a relatively weak payrolls (and earnings) report next Friday (March 10th) to prevent the Fed moving on March 15th.

To mark my 1275th issue of Tradernoble Daily Commentary I am offering a special 2 year rate of Euro 2750 for my Platinum Service which includes 1/4 updated emails throughout the trading day. This offer is open to both new and existing members and if anyone is interested can you please contact me on bryan@tradernoble.com for details.

For anyone following my Platinum Service it made 62 points yesterday to finish February with a gain of 1481 points having made 1734 points in January, 1351 in December, 1971 in November and 1582 in October. The previous four months saw gains of 1142, 1782, 1682 and 2550 points respectively. Since I started this Platinum Service in June 2015 it has averaged a monthly gain of over 1800 points.

Fiscal policy hints – or lack thereof

On domestic taxes:

“Right now, American companies are taxed at one of the highest rates anywhere in the world. My economic team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone. At the same time, we will provide massive tax relief for the middle class”

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On potential border taxes:

“We must create a level playing field for American companies and workers. Currently, when we ship products out of America, many other countries make us pay very high tariffs and taxes — but when foreign companies ship their products into America, we charge them almost nothing” “At our meeting (with Harley Davidson) I asked them, how are you doing, how is business? They said that it’s good. I asked them further how they are doing with other countries, mainly international sales. They told me — without even complaining because they have been mistreated for so long that they have become used to it – – that it is very hard to do business with other countries because they tax our goods at such a high rate. They said that in one case another country taxed their motorcycles at 100 percent. They weren’t even asking for change. But I am. I believe strongly in free trade but it also has to be FAIR TRADE.”

On infrastructure:

“To launch our national rebuilding, I will be asking the Congress to approve legislation that produces a $1 trillion investment in the infrastructure of the United States — financed through both public and private capital – creating millions of new jobs. This effort will be guided by two core principles: Buy American, and Hire American”.

None the wiser

In short, none of these passages leave us much the wiser in regards to whether Congress – or the administration itself – will insist that personal and corporate tax cuts must be funded from higher taxes or revenue raising measures elsewhere; whether a border adjustment tax that penalises imports (and potentially subsidises exports) is a runner; and what the potential split between public/private financing of $1tn worth of infrastructure spending might be (and of course, what if anything Congress is likely to countenance in this regard).

There is really not much else to be said at this stage. Dare we say that at least for the next 10 days or so, the unfolding US economic calendar (ISM’s today and Friday and next Friday’s US payrolls report) and Fed chair Yellen’s speech on Friday, will be more important for markets than the President’s Twitter feed.

If confidence in a March Fed tightening is maintained, as well as the market’s willingness to better price for three Fed hikes this year than two, then the US Dollar can fare a little better in March than looked likely to be the case less than 24 hours ago.

In terms of the economic data, it was mixed. US Q4 GDP remained unrevised at a 1.9% annual rate, below the consensus that was expecting an upgrade to 2.1%. Looking ahead to Q1 2017, the advanced goods trade deficit is likely to drag on GDP growth being worse than expected due to a 2.3% jump in imports resulting in a headline goods deficit of $69.2bn – the highest since March 2015. Nevertheless, looking through the monthly volatility, the trend for GDP is sitting at around 2% which has still been strong enough to bring the Unemployment Rate down and keep printing payrolls at around 200k.

This morning on the economic front we have German, Euro-Zone and UK Manufacturing PMI at 8.55 am, 9.00 am and 9.30 am respectively. This is followed at 1.00 pm by German CPI. At 1.30 pm we have US Personal Income and the PCE Deflator. Next we have US Manufacturing PMI at 2.45 pm, followed by Construction Spending and ISM Manufacturing at 3.00 pm. Finally at 7.00 pm the Fed will release its Beige Book.

March S&P 500

Unfortunately the S&P just missed my 2357 buy level with a 2357.25 low print before rallying into the close and I am still flat. Incredibly with the US Indices closing slightly negative ahead of Trump’s speech, the McClellan Oscillator closed in negative territory with a -31 print. This probably generated a Hindenburg Omen but this component is not updated as I go to print. There is no doubt that just a few main stocks are leading this rally over the past month and unfortunately we will have to wait for another two weeks to see what Trump is going to announce which so far has only been rhetoric. Sentiment levels remains at extreme levels as mentioned at length by me in my Daily Commentary over the past 10 days and today I will now lower my sell level for the S&P to 2376/2381 with a 2386 stop. If I am taken short and subsequently stopped out of this position I will be a more aggressive seller into the longer term trend line at 2394/2400 with a 2406 stop. I will also raise my buy level slightly to 2354/2360 with a 2349 stop.

EUR/USD

Earlier this morning the Euro traded lower to my 1.0540 buy level. I am not comfortable with being long the Euro having studied both Dudley’s and Trumps’ speeches overnight and I have now cut my long Euro position here for a breakeven and I am now flat. I cannot believe I am saying this but I do not want to be long the Euro at this time. With the odds increasing dramatically on a Fed Rate hike in two weeks I will now look to sell the Euro on any rally higher to 1.0610/1.0640 with a 1.0670 tight stop.

March Dollar Index

As I already bought the Euro I did not sell the Dollar Index as I wanted to be flat ahead of Trump’s speech overnight. Today I will look to sell the Dollar into the major 102.45 resistance level by being a seller on any rally higher to 102.15/102.45 with a 102.75 stop. I will also look to buy the Dollar on any dip lower to 100.90/101.30 with a 100.60 stop.

March DAX

I did not have much luck yesterday with the DAX just missing my 11775 buy level before rallying strongly this morning and I am still flat. The DAX has strong resistance at last week’s 12040 high and today I will be a small seller on any rally higher to 12030/12080 with a 12125 stop. I will also raise my buy level to 11820/11870 with a 11775 stop which is just below yesterday’s low print.

March FTSE

I am still flat the FTSE which is rallying this morning on the back of the much weaker sterling with Cable now trading at 1.2360. I am still flat and today I will now raise my sell level to 7330/7365 with a 7390 stop. I will also raise my buy level to 7220/7255 with a 7195 stop.

Dow Rolling Contract

My Dow plan worked well with the Dow trading higher to my 20880 sell level earlier this morning. But just like and Dow short position you have to be quick to take tour profit and I subsequently emailed my Platinum Members to exit this position at 20840 and I am now flat. It looks like the Dow is going to hit my 20950/21120 target level and today I will be a seller in this area with a 21170 stop. Given how overbought the Dow is trading coupled with the fact that the McClellan Oscillator closed negative I do not want to be long the Dow at this time.

March BUND

My Bund plan worked well with the market trading to a 165.69 low print after I posted yesterday morning which enabled me to cover my short 166.15 position at my revised 165.95 T/P level and I am now flat. This morning the Bund hit my 165.60 buy level but I did not buy the market myself as I wanted to analyse Trumps’s speech. For any member who did buy Bund I would take my gain here and go flat. Today I will lower my buy level to 164.90/165.25 with a 164.60 stop. I will still look to sell the Bund on any rally higher to 166.15/166.45 with a 166.70 stop.

Gold Rolling Contract

I am still flat Gold which is finally following the Mining stocks lower. It is possible that after a huge run higher over the past 10 weeks that we have put in at least a temporary top at yesterday’s 1265 high print. I will now look to sell Gold on any rally higher to 1255/1262 with a 1268 tight stop. I do not want to be long Gold at this time.

Silver Rolling Contract

As I wanted to be flat ahead of Trump’s speech last night I covered my 18.38 long position at 18.40 and I am now flat. We have had a fantastic run in Silver since early December and today I am going to stay flat as I want to see how the price action develops especially in light of how weak the mining stocks are trading. I covered another 30% of my 15.80 Pension position yesterday at 18.40 and I am still long 40% of this position and nervous.