Two things drove markets lower today one being a Brexit speech by UK PM May and the other was comments by US PE Trump who, in a Wall Street Journal article, said the US dollar was too high and Republican tax reforms were too complicated. Banks and healthcare led stocks lower as markets appear to be consolidating ahead of the inauguration on Friday. The Dow closed off 59 points on heavy volume to end the day at 19,826. Bank earnings continue to come in hotter than a cup of coffee as Morgan Stanley and Comerica reported earnings this morning that crushed estimates.
Energy and material stocks did well as Nobel Energy purchased Clayton Williams Energy and Exxon announced a major purchase of drilling rights in the Permian Basin.
Trump is making things interesting in the car business with threats of import tariffs on cars made in Mexico. BNW is currently building a plant in San Luis Potosi for the 3 series with output intended for the “global” market. Trump said over the weekend that a 35% import duty would be attached to any of these cars coming to the US. The tariff is kind of like a fancy new expensive hood ornament. Hyundai and Kia announced they will spend $3.1 billion in the US over the next 5 years and may even build a new American factory. General Motors apparently now plans to invest one billion in US factories which could create upwards of 1,000 new jobs. The message to car companies is that if you want to sell in America you should build in America or you could find yourself stuck with that expensive new hood ornament.
Gold shot higher after President Elect Trump said the strong US dollar against the Chinese yuan “is killing us”. The dollar then fell and at the close gold was up $19.10 an ounce to $1,215.30 an ounce. This could be viewed as a policy risk trade.