As the Trump presidency moves closer to reality, I thought I should pick several market indicators as gauges of how things are going. To the extent these indicators turn more positive or negative, we might consider revising our opinions accordingly.
Of course there is another way to think about this exercise. You might believe, as I sometimes do, that your judgment of the Trump administration is better than that of the market. In that case, following and trading these and related indicators is a possible way to make money.
I start with the view that the most significant and possibly most dangerous influence of a president is on foreign policy. Foreign policy is where the president has the most autonomy and the greatest reach, so if the worst predictions about Mr. Trump turn out to be true, the negative consequences ought to show up in some of the world’s most fragile spots.
Along these lines, my first nomination for a Trump-related market indicator is an index of Baltic stocks, namely the OMX Baltic Benchmark Index. It is a common and serious worry that the connections of the Trump administration to Russia will lead the U.S. to forsake the North Atlantic Treaty Organization and cave to the demands of President Vladimir Putin. If that is the case, the Baltics are likely to be among the biggest losers.
The good news is that Baltic stocks are up roughly 20 per cent over the last year and generally have been rising. While they dipped following Mr. Trump’s election, they have since regained that ground and then some.