One Trader Explains How To Trade Trump Weekends

Weekends under Donald Trump are going to be scary for traders.

We already knew, going into January 20, that “Tweet risk” was something we had to be concerned about on a daily basis as the (then) President-elect could push around anything from GM shares to the USDMXN with a deft swipe of his small thumbs.

Well now this guy is in the White House. Over the weekend we saw how crazy things can get as protests broke out at airports across the country after confused authorities began detaining travelers with connections to the list of countries on Steve Bannon’s Donald Trump’s hit list.

The jitters were apparent on Monday morning and in early Asian FX trading.

If you’re wondering how in the world you’re supposed to operate in this environment, Bloomberg’s Richard Breslow has some advice: do the exact opposite of what you did during the eurozone debt crisis and during the Greek tragicomedy that unfolded in the summer of 2015.

Via Bloomberg’s Richard Breslow

Well, he’s certainly not making it easier for investors to stay comfortable with their positions. The legal and moral issues aside, what was the first thing you thought of when you saw the weekend news from the White House? When does my FX salesman get into the office?

  • It’s hard not to at least call and make sure there are indeed bids out there. But a pattern of going home with your trend trades on, waiting nervously to see if there’s going to be any weekend firestorm, selling into a low-ball bid Sunday and being forced to pay up for those same assets as the week progresses is a tough scenario for making money
  • Especially if you are model-based and haven’t figured out how to program moral outrage as one of the inputs
  • If the game changes on you, it requires a change in strategy. For your sanity as well as P/L. So what is likely to emerge? The reverse of what we saw at the height of the European leg of the financial crisis
  • Back then it seemed there was an emergency EU summit every weekend. Traders got into the habit of selling risk all week, the news was bad after all. Then on Friday buying some back in case there was that promised news that would save the day. And on Monday putting the risk back out, hopefully on some headline bounce. For a long time it looked like there was indeed faith in the system because weeks seemed to end better than they started
  • Now, with risk generally bid, traders may realize that you buy risk during the week, the global numbers are getting better, and then lighten up on Friday. Let him sow some mayhem on Saturday, you’ll be there with your own low-ball bid sometime Monday or Tuesday. Friday weakness that leaves a soured-tone heading home, giving way to trends sneaking back into formation by hump day
  • It’s going to be chock-a-block with numbers and central banks this week. A-list numbers in the U.S. plus the FOMC. Inflation numbers and two Draghi speeches in Europe. BOE, BOJ. Even vacationing China will release PMIs. These will have to be considered alongside whatever other reservations you may have

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Or, summed up…

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