Wall Street awaits Trump's inauguration, but two presidents could move the markets in the week ahead

The 'Trump trade' that dominated the weeks leading up to Inauguration Day may pause a bit in the days leading up to the swearing in of Donald Trump as 45th U.S. president next Friday.

"[The stock market] feels like it probably wants to rest here," said Art Cashin, director of floor operations at UBS. Stocks were mixed in the past week, with the Nasdaq up nearly a percent at a record 5,574. The S&P 500 closed at 2,274, down 0.1 percent for the week, and the Dow was also slightly lower, down 0.4 percent ended at 19,885. The Dow is up about 9 percent since Trump won the election, sparking a rally in stocks, the dollar and a sell-off in bonds.

The inauguration is the big event of the week ahead, and markets are anticipating what Trump will say when he speaks to the nation as president for the first time. But ahead of that, there are a flurry of Fed speakers, another wave of earnings reports, and key CPI inflation data.

There is also the annual World Economic Forum in Davos, Switzerland, and it may be a bit more important than usual this year because of the appearance there of Chinese President Xi Jinping , who is expected to speak on globalization Tuesday.

"It's interesting the Chinese president will be there, and he's going to be, from all the signs, the most important international speaker there. It's the first time, I believe, the Chinese president has ever come," said Daniel Yergin, vice chairman of IHS Markit. "He will be seeking to take up the mantle of an open trading world in response to the uncertainty and mixed signals from the United States. He will be looking to do on the global stage what they're already doing in Asia with the end of [Trans-Pacific Partnership] and China pushing its own regional trading relationships."

Cashin said Xi's comments could be important to the markets. "We're starting to hear acrimonious back and forth about China [from Trump]. … It's unlikely [Xi will] want to fire a shot across the bow but maybe for domestic consumption he might want to do that. I think you want to make a note of that. It's a dark horse you want to watch," he said.

Davos is scheduled just as the Trump administration takes the baton from the Obama administration. It will be heavily attended by U.S. corporate executives, but U.S. policy makers may seem to have a lower profile than in other years. Vice President Joe Biden and U.S. Secretary of State John Kerry are expected to attend, just days before leaving office. Anthony Scaramucci, an advisor to Trump is also attending.

"We'll hear a lot from other countries as they try to sort out what Trump policies will be and how to reshape their polices to adjust to it," Yergin said.

Trump's inaugural speech should be positive for the market if he focuses it on the pro-growth agenda that has driven stocks higher. Traders have been concerned about his protectionist comments and threats of tariffs.

Stocks wobbled and Treasury yields moved lower and the dollar fell after Trump disappointed markets when he did not focus on his tax or stimulus plans at a press briefing Wednesday.

"Trump wants to move quickly on several key items — Obamacare repeal , tax reform , the Supreme Court nominee, the wall funding and infrastructure. He will have to use the inauguration speech when he has the bully pulpit to make the case these should get done, and they should get done quickly," said Dan Clifton, head of policy research at Strategas. "Congress does not move at a very fast pace. Trump moves, from the business world, at a fast pace."

Clifton said Trump may take aim at China early in his administration, and he will also focus on the North American Free Trade Agreement between the U.S., Mexico and Canada, which he views as unfair.

"Investors have to understand that Donald Trump is going to go after China and he's going to go after Mexico, but for different reasons," said Clifton. "… He's telling you this is a priority of his. He's going to tell you he's getting tougher on China. That could be labeling them a currency manipulation threat. There could be a tariff on Chinese goods. That's the risk to the downside." Clifton said Trump may also move quickly to make individual trade agreements with countries, like Japan.

Besides the inauguration itself, investors will continue to focus on Trump's Cabinet. The confirmation hearing for Steven Mnuchin as Treasury secretary will be closely watched Thursday.

Meanwhile, there is a group of Fed speakers that could get some attention, including Fed Chair Janet Yellen who speaks twice, and answers questions on the economy Wednesday before the Commonwealth Club of San Francisco and Thursday night at Stanford. New York Fed President William Dudley also speaks at a retailing conference Tuesday, and Fed. Gov. Lael Brainard also speaks Tuesday morning.

"It seems like it will have a kind of dovish tint to it. Yellen is speaking a couple of times and Brainard. It felt kind of hawkish this week. I don't know if that's who is speaking or the general feel of the committee now. We'll know that next week," said Amherst Pierpont chief economist Stephen Stanley.

There are also some major earnings ahead, including Morgan Stanley on Tuesday, Citigroup and Goldman Sachs on Wednesday, American Express and IBM on Thursday and General Electric on Friday.

"I don't think people are focusing enough on the fact we have pretty easy earnings comps year over year. Q4 and Q1 were pretty crappy last year," said Dan Veru, Palisade Capital Management's chief investment officer.

He said the market should be buoyed by Trump's inauguration. "Corporate CEOs they just feel like some of the things that were headwinds are going to go away. The risk is those things will take much longer than they think or they don't happen at all. But I don't think it's a risk that they don't happen. It's just how and when," Veru said.

Stanley said he also expects Trump to make some quick moves. "I think what people are mainly going to be focused on in the near term is how aggressive the president is going to be trying to unwind some of the regulatory stuff."

Veru said Trump can spark economic activity immediately just by approving some of the things held up by the Obama administration, such as the TransCanada Keystone XL pipeline.

"The moment the cannons go off, and he's president, he's greenlighting all of those. … It kind of keeps the animal spirits moving. It buys him time," he said.

What to Watch

Monday

Martin Luther King holiday

Tuesday

Earnings: Morgan Stanley (MS), UnitedHealth, (UNH) Comerica, CSX, (CSX) Interactive Brokers

8:30 a.m. Empire State manufacturing

8:45 a.m. New York Fed President William Dudley

6:00 p.m. San Francisco Fed President John Williams

Wednesday

Earnings: Citigroup (NYSE:C), Goldman Sachs (GS), US Bancorp, Canadian Pacific Railway, Charles Schwab (SCHW), Northern Trust, (NTRS) TD Ameritrade, Netflix (NFLX), Commerce Bancshares, Fastenal

8:30 a.m. CPI

8:30 a.m. Business leaders survey

9:15 a.m. Industrial production

10:00 a.m. NAHB

11:00 a.m. Minneapolis Fed President Neel Kashkari

2:00 p.m. Beige book

3:00 p.m. Fed Chair Janet Yellen speaks to Commonwealth Club of San Francisco

4:00 p.m. TIC data

Thursday

Earnings: Union Pacific (UNP), Bank of NY Mellon, American Express (AXP), IBM, Skyworks Solution, Check Point Software, KeyCorp, (KEY) People's United Financial

7:45 a.m. European Central Bank rate decision

8:30 a.m. Initial claims

8:30a .m. Housing starts

8:30 a.m. Philadelphia Fed survey

3:45 p.m. San Francisco Fed's Williams

4:00 p.m. Boston Fed President Eric Rosengren

Friday

Inauguration Day

Earnings: General Electric (GE), Kansas City Southern (KSU), SunTrust, Schlumberger, (SLB) Rockwell Collins, Synchrony (SYF)

9:00 a.m. Philadelphia Fed President Patrick Harker

1:00 p.m. San Francisco Fed's Williams

Updated to include names of U.S. officials attending Davos

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