By: Kent Engelke | Capitol Securities

To date, the Trump administration has positively influenced equity markets. Will the opinion soon change? Typically, “Presidential Issues” are equity negative.

Like most, I do not know what is true and what is not true.

With the above written, from firsthand experience whenever a power base is threatened, the environment becomes extremely toxic with intense vitriol.

Several weeks ago, I opined the President is the “Master of diversionary politics,” utilizing meaningless events (size of inauguration, Ivanka’s clothing line, etc.) to deflect attention from his real intentions. This is nothing new as every national leader has utilized such tactics.

I also opined President Trump has utilized social media more efficiently and effectively than President Obama. To remind all, according to both the WAPO and the NYT, President Obama’s “adroit” use of social media utilizing dubious ads was a major reason for his reelection in 2012.

Several weeks ago I wrote it is going to get uglier before it will get better.

Personally, I do not think the President is trying to create some authoritative police state for one simplistic reason. Trump is trying to reduce the size of government and government regulations/interference. What the President is attempting directly contradicts what some are suggesting.

At this juncture, the markets are focused upon Trump’s tax and regulatory reform agenda, not the vitriol, perhaps transitioning to monetary policy as a March increase is now largely anticipated.

As asked above, will attention change to “issues” surrounding the Administrative branch? Only history can answer this question.

Returning back to monetary policy, the current market catalyst, the Fed’s inaction next week will now be a surprise. I believe if there is no change in policy, all markets will respond negatively for many will interpret Yellen as extremely dovish, which then raises inflationary expectations. If inflationary expectations become unanchored, yields can rise considerably more than most expect.

Last night the foreign markets were mixed. London was up 0.07%, Paris down 0.32% and Frankfurt up 00.5%. China was up 0.26%, Japan down 01.8% and Hang Sang up 0.36%.

The Dow should open quietly lower. The 10-year is unchanged at 2.50%.