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Trump's foreign trip a chance to soothe a market 'starting to give up'

  • Trump's visit to the Middle East starts in Saudi Arabia on Saturday, with markets watching intently.
  • Despite more bad headlines this week, the stock market has remained resilient and on path to post just modest losses.

After arguably the worst week of his short time in office, President Donald Trump has the opportunity during his global tour next week to calm the political storms.

Or, of course, he could simply make things worse.

Markets will be watching intently for which Trump boards Air Force One to take a sojourn across the Middle East: The stately leader who delivered a rousing address to Congress on Feb. 28 and instilled hope that his administration would lead by example, or the impetuous man-child who makes rash off-the-handle public lash-outs and debases his enemies on Twitter.

"In some ways, we might end up getting both Trumps. It's not mutually exclusive," said Stephen Myrow, managing partner at Beacon Policy Advisors. "These types of trips theoretically lend themselves to presidential moments, to the extent that he stays on script."

The "script" for Trump would look something like this: A series of speeches aimed at assuring U.S. allies of solidarity in the fight against global terrorism mixed with a message of tolerance, absent fiery rhetoric or damaging sound bites.

As James Phillips, senior Middle East research fellow at the Heritage Foundation, a conservative think tank, put it in an essay: "President Trump should use this trip to mobilize international support to defeat ISIS and other terrorist groups, rally Arab support to contain and roll back Iran, and set the stage for renewed Arab–Israeli peace negotiations.

What could happen, though, is anyone's guess.

Donald Trump
Saul Loeb | AFP | Getty Images
Donald Trump

Market still has hope

Myrow worries that Trump's principal speechwriter for the trip will be Stephen Miller, who penned the president's combative inaugural speech. Myrow called the tone "dark, brooding, ominous at times, finger-in-your-chest kind stuff" that plays to Trump's "America First" base but leaves others "scratching their heads or wincing at times."

Even with the misgivings over the president's tone and behavior, the market has proven resilient.

The worst day of the year for stocks Wednesday — in the face of damaging revelations about Trump's apparent attempt to influence an FBI investigation — was followed by two solid sessions to close the week. Even with Wednesday's washout, the losses for the week look to be minimal.

Trump is playing to a market that still believes in his economic agenda, though a misstep on a big stage could thwart that confidence in a hurry.

"Obviously the administration has had a pretty horrible couple of weeks. But the market is living on massive hope that there's going to be some sort of tax legislation," said Michael Yoshikami, founder of Destination Wealth Management. "People on Wall Street are starting to give up. So any news cycle where there's not more potential scandal is a net positive."

WATCH: The stakes are high, but Trump should find welcoming arms in Middle East