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Risk Appetite Evaporates As 18 More Contacts Between Trump, Russian “Godfather” Revealed

Everything was going (relatively) ok and then...

I’m not entirely sure why markets were calmed by the Wednesday evening announcement that former FBI Director Robert Mueller has been appointed special counsel on the probe into possible collusion between the Trump campaign and Russia.

After all, nothing good can come of that for Trump assuming there was in fact collusion (which everyone knows there was). But more to the point for markets, either Mueller’s sterling reputation holds up and he finds what he’s looking for (terrible for risk assets), or somehow Trump manages to obstruct that investigation too (even worse for risk assets because eventually, people would find out about the obstruction).

Be that as it may, there was some sense of relief in early overseas trading as the dollar stabilized against the yen and yields stopped falling. And then, at 5:09 a.m. EST, this crossed the wires:


Here are some excerpts from that story:

Michael Flynn and other advisers to Donald Trump’s campaign were in contact with Russian officials and others with Kremlin ties in at least 18 calls and emails during the last seven months of the 2016 presidential race, current and former U.S. officials familiar with the exchanges told Reuters.

The previously undisclosed interactions form part of the record now being reviewed by FBI and congressional investigators probing Russian interference in the U.S. presidential election and contacts between Trump’s campaign and Russia.

Six of the previously undisclosed contacts described to Reuters were phone calls between Sergei Kislyak, Russia’s ambassador to the United States, and Trump advisers, including Flynn, Trump’s first national security adviser, three current and former officials said.

Conversations between Flynn and Kislyak accelerated after the Nov. 8 vote as the two discussed establishing a back channel for communication between Trump and Russian President Vladimir Putin that could bypass the U.S. national security bureaucracy, which both sides considered hostile to improved relations, four current U.S. officials said.


The people who described the contacts to Reuters said they had seen no evidence of wrongdoing or collusion between the campaign and Russia in the communications reviewed so far. But the disclosure could increase the pressure on Trump and his aides to provide the FBI and Congress with a full account of interactions with Russian officials and others with links to the Kremlin during and immediately after the 2016 election.


In addition to the six phone calls involving Kislyak, the communications described to Reuters involved another 12 calls, emails or text messages between Russian officials or people considered to be close to Putin and Trump campaign advisers.

One of those contacts was by Viktor Medvedchuk, a Ukrainian oligarch and politician, according to one person with detailed knowledge of the exchange and two others familiar with the issue.

It was not clear with whom Medvedchuk was in contact within the Trump campaign but the themes included U.S.-Russia cooperation, the sources said. Putin is godfather to Medvedchuk’s daughter.

Medvedchuk denied having any contact with anyone in the Trump campaign.

“I am not acquainted with any of Donald Trump’s close associates, therefore no such conversation could have taken place,” he said in an email to Reuters.

Gotta love that highlighted bit. So a Ukrainian oligarch to whose daughter Putin is literally “The Godfather” lied about talking to Trump associates. You can’t make this shit up.


You’re encouraged to read the entire post.

Needless to say, that catalyzed a fresh round of risk-off behavior across global markets:


Elsewhere, GBPUSD hit $1.3023, its strongest since September 30, supported by strong retail sales which rose 2.3% m/m in April versus an estimated +1.1%.



Here are a few excerpts from Kit Juckes’ (SocGen) overnight take which, you’re reminded, was written prior to the publication of the Reuters story cited above:

The most idiosyncratic currency in the world is still the yen, where strong Q1 GDP data (2.2% SAAR) have seen the currency lose ½%. The deflator has fallen further into negative territory (- 0.8% y/y). Unusually, the upshot is a weaker yen on a day when the Nikkei is falling, but that does suggest the equity market is playing catch-up with the S&P index while the market is already looking ahead. The more I fear that the peak in US yields will be lower than we expect, the more i doubt that we will get to the USD/JPY 120-125 peak we are forecasting, but short yen strategies will go on working. EUR/JPY is back just below 124 but still looks set for 130-140.

Other overnight news included Australian jobs data that saw the unemployment rate fall to 5.7%, and employment increase by 37,400. This is a hideously volatile data series, but the 6- month average job gain is now 27,800, up from a low of 800 last September, and that pick-up is mostly driven by full-time jobs. Buying AUD/USD against the uptrend support at 0.7330 appeals to me.

There’s little on the US economic calendar today (jobless claims, Philadelphia Fed index) and the focus will still be on President Trump’s travails.

Also not helping the mood overnight were reports that Brazil’s Temer apparently bribed some folks, prompting the opposition to ask for his resignation. Globo said several members of the governing coalition also would prefer it if he just resigned. That should sound familiar to US audiences. You should really read the recent history (so 2015-ish to now) of Brazil’s political turmoil because it is absolutely hilarious.

Anyway, Asian shares were lower across the board and so are European equities:

  • Nikkei down 1.3% to 19,553.86
  • Topix down 1.3% to 1,555.01
  • Hang Seng Index down 0.6% to 25,136.52
  • Shanghai Composite down 0.5% to 3,090.14
  • Sensex down 0.4% to 30,549.86
  • Australia S&P/ASX 200 down 0.8% to 5,738.31
  • Kospi down 0.3% to 2,286.82
  • FTSE 7394.69 -108.78 -1.45%
  • DAX 12513.77 -117.84 -0.93%
  • CAC 5252.60 -65.29 -1.23%
  • IBEX 35 10602.20 -183.90 -1.70%

We’ll leave you with a hilarious excerpt from a DealBreaker post out Wednesday:

Donald Trump isn’t changing, he’s a 70-year-old man with the emotional intelligence and political acumen of a ferret smoking trucker speed. The policies he espouses are scattershot and then changeable, and he is fundamentally disinterested in anything that isn’t Donald Trump. His election gave us the “Trump Bump” which was bizarre, entertaining and wildly profitable for many, but then it seems like we forgot to correct for the data point that Donald Trump is the fucking President of the United States. 



6 comments on “Risk Appetite Evaporates As 18 More Contacts Between Trump, Russian “Godfather” Revealed

  1. Here you go, what is wrong with this tweet?

    “With all of the illegal acts that took place in the Clinton campaign & Obama Administration, there was never a special councel appointed!”

    • Um, everything? Not aware of any illegal acts committed in the Obama administration or the Clinton campaign, unless you count Russian hacking of Clinton campaign e-mail servers.

      And “counsel” is misspelled.

  2. As an independent I am well aware of the many sins – both legal and extra legal of both the Bush (including being accused of War Crimes) and Clinton administrations (including being accused of murder and being impeached).

    How is it that I feel no better about US Presidential candidates since, in general and or the one recently elected when he asks for the same legal (illegal) latitudes as his predecessors ultimately received – just to maintain his 4 month old legally catastrophic and disastrous Presidency? This is intellectually absurd – essentially juvenile logic (Remember your Mom’s attempt to challenge your 10 year old intellect – “If Johnny jumped off a cliff would you jump off, too?) and this constant comparison/deflection does not address resolving the current criminal/treasonous accusations and obvious rapidly growing no-confidence vote that the majority of political leaders and Americans now give Donald Trump and his “so-called” administration – again only four months into a four year term.

  3. Anonymous

    Well, the link Lance Manly provided, does not work for me: “Sorry, that page doesn’t exist!” But I will note that it must be a tweet written by Trump, proven with yet another word the imbecile cannot spell. I read elsewhere his rant about this “witch hunt” and what about blah blah blah crap. He needs to quit spouting about all the illegal acts committed by Her and Him….not true….there were none…. only a bunch of gossip made up and repeated by that Fake News loop that he also rants about while pointing his finger at the wrong people. Some of that gossip actually was conjured by his own self! ha!

    Lance Manly, your man (well, I assume your man since you seem to be trying to deflect off him) – your man is corrupt and evil. Has been since he was only a child. Still a child in many ways. He is emotionally highly unstable; temperament aggressive and vicious; intelligence hahahahaha!; experience – well he bragged about his incredible business acumen but has proven zero. He has disqualified himself repeatedly in the last few weeks by his performance not to mention the waste of our tax dollars so he can go play golf every f’n weekend.

    The lid is about to come off this massive cover up and you know what — I would not be surprised if even Trump is shocked because there is a chance he is indeed totally clueless. He is just too stupid to know he is stupid.

    – Murphy

  4. Pingback: Trump “Squeezing Lemon Juice Into Cuts With Every Tweet” – And Other Zingers From Analysts –

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