Trump & Terror Hint At Market Pullback: 5 Ultra-Safe Picks

Investors seem to be getting increasingly anxious about President Trump’s capability to push through his pro-business agenda. The backlash following his remarks on the violent protests in Charlottesville, which also led to the exodus of business executives from his prominent councils, aggravated matters. In the wake of these, Trump’s senior adviser Steve Bannon’s dismissal from the White House raised hue and cry among the Republican congress men. Heightened terror fears added to the malaise after several lives were lost after a van plowed into a crowd in Barcelona.

Such developments compelled U.S. stock benchmarks to close lower, while a measure of market volatility scaled higher. Some strategists also believe that the market is now the most expensive since 2003, which might result in further selloffs.

Thanks to the bearish trends, investing in stocks unperturbed by market gyrations seems to be a prudent choice.

Increased Volatility Indicate Bearish Market Prospects

Lately, there has been a lot of evidence that volatility is making a comeback. The so-called “fear-index”, the CBOE Volatility Index (VIX), has climbed around 50% so far this month. And if it remains so till the end of this month, it will be the highest one-month percentage increase since August 2015. The VIX is already up 10% on a year-to-date basis. Thanks to such an upward trajectory, the VIX’s 10-day moving average has crossed its 100-day moving average, a sign of further spike in volatility and stock market decline.

Skittish investors have already left Wall Street in fears of additional pullbacks. The Dow Jones and the S&P 500 booked the second straight weekly loss, with the blue-chip index suffering its steepest two-week percentage decline since mid-September 2016. The tech-heavy Nasdaq Composite, in the meanwhile, logged its fourth straight weekly loss, its longest losing weekly streak since May 2016.

Anxiety Increases Over Trump’s Unpopularity

U.S. equities closed off session lows after Steve Bannon left the administration. The departure of Bannon exposed a lot of disagreement in the Trump-era Republican Party. Such differences are hampering Trump administration’s efforts to kick-start the pro-economic policies. Needless to say, Trump’s promises on deregulation, trimming taxes and increasing infrastructure outlays, did, help the broader markets gain traction and climb to record highs this year.

Bannon’s departure may offer some clarity concerning the balance of power in the White House, but, the timing was disastrous. Republican congress leaders are seriously frayed following Trump’s abstruse remarks on the white supremacist rally in Charlottesville that resulted in the death of a counter-protester at the hands of a suspected Nazi sympathizer. In fact, he added to the woes of his own administration by saying “both sides” are liable for the bloodshed.

The real estate magnets’ approval rating has tanked to a record low as his words and actions continue to rattle investors. Several top executives have already parted ways with Trump and have condemned his confrontational response to the Charlottesville incident.

Terror Concerns Linger

Stocks witnessed an extended slide after terrorists struck a crowded tourist street. A van, last week, went through a crowd of tourists in Barcelona, killing at least 13. Such a dastardly act was followed by a second attack in Cambrils, where police said they had shot five terrorists. Both the incidents have claimed the lives of at least 14, with 130 others severely injured.

Travel and leisure stocks took a beating along with banks, while industries across the board were caught in the downturn. Such unfortunate events remind us that the geopolitical risks still pose a threat, with nerves still raw from the escalated tensions in North Korea.

Bet on These 5 Safe Stocks Now

Concerns about Trump administration’s policy paralysis are weighing on stocks, while intensified terror is adding to the malaise. The market, in the meanwhile, is now more expensive that it has been since the dot-com era, a reason for further pullbacks. According to a report by Bank of America Corp (NYSE:BAC) , the S&P 500’s forward price-earnings ratio touched its highest level in thirteen and a half years, last month (read more: Zacks Investment Research

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Written By: Zacks Investment Research