23.01.25 - More clarity in Trump’s strategy

Another politically driven day. Today, president Trump joined the World Economic Forum (WEF) in Davos via video. During his speech, he outlined several key points regarding his political strategy:
- lower interest rates
- lower oil price
- lower tax for corporates as an incentives to produce in the US - else countries would face tariffs
- Stopping the war through increased sanctions on Russia - lower oil prices should force Russia to join discussions
- Europe: A warning of tariffs if the EU continues to treat the US and its institutions 'unfairly' in terms of trade and regulations
- US, to be the capital for cryptos

Markets: Oil prices reacted promptly with a correction. Cryptos down for the day in a volatile trading. Stocks indices gaining across the globe, tech stocks lagging for once. Interest rates with some increase, US dollar trading sideways in a broad range.

My View: At the moment, it is crucial to closely monitor the news and the impacts on all financial market indicators. President Trump's speech was particularly interesting to follow, as it provided to me greater clarity on his strategy and political game plan.
The possibility of tariffs fuels fears of inflation among investors. However, lower oil prices could offset some of the upward pressure on prices. Meanwhile, lower interest rates would decrease borrowing costs, potentially boosting investment and consumption.
It will be interesting to see if market participants interpret this similarly - that inflation concerns may be overstated if tariffs are implemented. If not, this could have major impact on markets.

Following the speech, I took immediate action to avoid downside, closed today my long position in WTI crude oil at a price of USD 75 a barrel, entered at USD 67, implemented via a leveraged ETF, see my blog article: “Once called the «Black Gold» - did oil lose its shine?, 1 October 2024.

I gained a clearer understanding of the political game plan after analyzing the speeches and recent news flow. As a result, my concerns and uncertainties have diminished, leading me to identify an opportunity to increase the risk exposure in my portfolio.
I reinvested the proceeds directly into US Small Caps (ETF) and the defensive Food & Beverages sector (ETF) which has declined overproportionally since mid December due to tariff concerns, rising interest rates and strengthening US dollar.
In case risk on sentiment persists, I plan to further increase my equity exposure.

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