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'Unsettled' — What you need to know in markets on Tuesday

Stocks were little changed on Monday, which marked Donald Trump’s first full business day as President of the United States.

Looking out to Tuesday, the earnings and economic calendars get a bit busier as the next couple weeks should be among the busiest of this earnings period.

Markit’s flash reading on US manufacturing in January will be the data highlight, with that report crossing at 9:45 a.m. ET. Later we’ll also get the December report on existing home sales and the latest manufacturing activity read from the Richmond Fed.

On the earnings front, Tuesday’s biggest reports will be from Lockheed Martin (LMT), 3M (MMM), Verizon (VZ), Johnson & Johnson (JNJ), and Travelers (TRV).

Trump’s first day

On Monday, Donald Trump began his first full business day as President.

For investors who initially bought Trump’s victory, taking his pro-business bent as a positive, reality is setting in. And it might not be all good.

“‘Unsettled’ is our best description of fund managers’ mindset as the new administration takes office,” writes David Kostin, a strategist at Goldman Sachs. “During an extensive series of client meetings in the US, Europe and Asia, it became apparent that investors are confused about how to best position portfolios under a Trump presidency.”

On Monday, Trump moved to remove the US from the Trans-Pacific Partnership, a move widely expected by markets. Trump also said he would look to renegotiate NAFTA, further signaling his clear intentions to change the US’ major trade relationships. And in a briefing on Monday, White House Press Secretary Sean Spicer emphasized the US would look to negotiate bilateral trade agreements.

It is, very clearly, a new era for US trade. And likely the global economy.

“Policy uncertainty was a topic of concern raised in every client meeting,” Kostin writes.

“While we expect corporate tax reform legislation will be enacted in 2017, the magnitude of cuts and offsetting revenue proposals are unknown. Many tax reform ideas have been discussed in general terms but the administration has not yet endorsed any specific proposals. Investor confusion increases when a topic that appears to be gaining political momentum — such as border-adjusted tax reform — is suddenly discredited when the President dismisses the idea saying it is ‘too complicated.'”

Since a sharp rally following Trump’s election, markets have been roughly unchanged over the last month. Overall, stocks weren’t doing much on Monday with the biggest move coming in the currency markets as the dollar was under pressure across the board.

But amid a seemingly placid surface reading on markets, conditions are clearly unsettled.

The Wall Street consensus, however, still seems, in many corners driven by a kind of optimism around Trump bringing wholesale change to Washington.

During Yahoo Finance’s Midday Movers show on Friday, Alan Valdes at Silverbear said that when Trump was shown on TV during inauguration coverage, cheers broke out on the floor of the exchange. The President’s appeal among a certain class of money-moving, white collar worker is clearly strong. And in markets and business, sentiment moves the needle as much as anything.

“We expect an unconventional presidency could serve as a catalyst for a constructive dialog among multiple levels of government and their diverse constituencies that moves the United States beyond the gridlock that has beset it for decades now,” writes John Stoltzfus, chief investment strategist at Oppenheimer.

“Ultimately a distinctive change in approach and style, which has already rattled the establishment, could prove conducive to economic growth, progress and a boost to the standard of living across a broad segment of the population, including current supporters and members of the opposition.”

And I think in these quotes Stoltzfus succinctly captures the particular style of business and economic optimism Trump has brought to markets.

Anything is better than what we’ve had, the argument goes, and so don’t worry as much about what could go wrong, just what might go right.

Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland

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