Hedge Now! Trump Says Stock Market Will Crash If His Physical Doesn’t Go Well

Donald Trump is super proud of the stock market rally he had absolutely no part in starting and/or facilitating, ok?

Trump tweets about the stock market so damn much that Deutsche Bank suggested on Wednesday that the leaked news about China’s alleged decision to review its policy on the purchase of U.S. Treasurys might have been an attempt on the part of the PBoC to show Trump that Beijing can create some bond market vol. if they want to. To wit:

At the same time, the multitude of Trump tweets on the US equity market has left a strong impression that the US could quickly waver on trade actions if China shows it has some power to hurt US equities; or (better still for China) if President Trump’s own actions directly hurt US equities. [We have] suggested that low bond vol is at the epicentre of the low vol world, so if a powerful party wants to roil the equity market, and push the VIX up, one of the best routes is via Treasury bond vol.

Of course as we and any number of others have pointed out on too many occasions to count, there’s a strong argument to be made that the 2017 rally had very little, if anything, to do with Donald Trump. After all, the “Trump trades” were either faded or else went sideways starting after the inauguration, the dollar had its worst year since 2003, and the yield curve is screaming “RECESSION!” at the top if its yield curve lungs.

What you’re seeing in stocks is the same thing you’ve been seeing in stocks since 2009 – namely the effect of trillions upon trillions in global central bank liquidity flow and predictably cautious forward guidance, creating an insatiable hunt for yield and reinforcing the central bank “put.”

And besides, even if you wanted to attribute the 2017 gains to Trump, the Dow still rose more in the 11 months following Obama’s inauguration than it did in the 11 months following Trump’s inauguration so you know, what the actual fuck is with all the tweets, right?

Well, we’ll tell you what’s with the tweets. Lacking any identifiable legislative accomplishments until the tax bill finally got across the finish line, Trump increasingly relied on the stock market to “prove” that he was doing a good job. That’s what was with all the tweets. Of course because stocks and other financial assets are overwhelmingly concentrated in the hands of the wealthy, Trump is doing whatever the opposite of “preaching to the choir” is when he tells his working class supporters how rich Steve Mnuchin is getting from the ongoing rally in risk assets.

You can read our entire archive about Trump and his stock market tweets here.

It’s against that backdrop that Trump weighed in on his upcoming physical examination and hilariously, he has now predicted that if he isn’t given a clean bill of health, stocks will crash.

And yes, we are deadly serious:

Twitter is amused…

"I think its going to go very well, I’ll be very surprised if it doesn’t," says Pres Trump, asked about undergoing a physical tomorrow. "It better go well, otherwise the stock market…," he jokes as press pool left the room. pic.twitter.com/KYGhZ7qK9R

— Mark Knoller (@markknoller) January 11, 2018

Just so everyone is prepared. TRUMP SAYS EXPECTS HIS PHYSICAL TO GO WELL FRIDAY OTHERWISE THE STOCK MARKET WILL TAKE A HIT – RTRS

— Neil Hume (@humenm) January 11, 2018

As reporters leave, Trump says his physical "better go well, or the stock market will not be happy."

— Kevin Liptak (@Kevinliptakcnn) January 11, 2018

Trump just now on his upcoming physical: "It better go well otherwise the stock market will not be happy."

— Kyle Griffin (@kylegriffin1) January 11, 2018

If ever there were a need to load up on hedges, this is surely it, because God knows that physical will not be going well…