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Trade On, Trade Off.

Days like today are always amusing to the extent they bring out the Don Quixote in people.

Days like today are always amusing to the extent they bring out the Don Quixote in the FinTwit crowd.

Pick your favorite widely-followed Twitter personality (anonymous or otherwise) and you’ll get a lot of strange bragging out how risk assets are buoyant in the face of geopolitical turmoil – strange because it’s never clear who those people are talking to. “Is the risk parity unwind over yet?!” “Guess that trade war didn’t pan out?!” Etc. Etc.

This is the rough equivalent of doing 95mph in a 45mph zone and then once you arrive safely at your destination, hopping out and taking a piss on the speed limit sign.


It’s not clear what the point is. But the best part is the journalists who like and retweet the boasting because those are the same journalists whose coverage of the myriad risk factors is being implicitly lampooned in the tweets they’re liking and retweeting.

On the bearish side, the commentary is equally silly. It’s always the same feigned incredulity. “So trade wars are good now?!” “What could go wrong?!” Etc. etc. And the same journalists like and retweet those tweets too.

It’s a pointless circle jerk that I will never fully understand because at the end of the day, we’re talking about pieces of paper and numbers on a screen which, in the final analysis, don’t mean shit one way or another. You can’t take it with you, my man. And there are easier (and more fun) ways to make it and lose it than trading.

So there’s some sobering/cryptic commentary from Heisenberg for you on Monday. You’re welcome.

And yes, markets did manage to shake off the trade war banter and the indeterminate Italian election results to trade higher pretty much across the board. Even Italian equities were only marginally lower.

Importantly, that doesn’t mean “trade war fears have eased” as CNBC suggested with this headline:


If I tear my ACL playing some pickup ball and I keep right on playing and somehow score 25, I didn’t “score 25 as my ACL injury eased.” Rather, I just shook off the injury. There’s a difference, namely that I’m still fucking injured. As a reminder, here is what Trump has to say about this situation:


U.S. stocks were up sharply. You can see the liftoff clearly in futs a little over an hour after the cash open:


Notably, this was yet another day when stocks moved 1% or more in either direction, underscoring the notion that we are indeed no longer in Kansas (Toto).


10Y yields rose into the afternoon:


Not a great day for the loonie which was rattled by Trump’s NAFTA rhetoric and then later by Lighthizer.


“Despite hard work of negotiators, the countries didn’t make the progress that many had hoped for in the current Nafta round,” Lighthizer told reporters in Mexico City, adding that “to complete Nafta 2.0, countries will need agreement on roughly 30 chapters and so far, only six have been closed.”

So that’s “good” news. “Now our time is running very short,” he added, just to make this shit sound a little more ominous.

Crude was up sharply. As Bloomberg reports, “data-provider Genscape Inc. was said to report that inventories dropped in Cushing, Oklahoma, according to two people with knowledge of the report.” Whatever.


On the day, European shares were markedly higher and even Italian stocks finished down only 0.4%:


European tech shares soared, rising some 2.5%:


Here’s EURUSD on the day – if you can divine anything from this, do let us know:


10Y yields in Italy were higher on the day, but frankly, it wasn’t anything all that dramatic considering the circumstances. Italian banks were of course crushed:


Credit Suisse cut Italian equities to underweight citing fading prospects of economic reform. CS did say the risk of an ‘Italexit’ or an Italian sovereign default is “extremely low,” but noted that the risk of an “extended political stalemate” will lead to a lack of necessary structural reforms. So yeah, no surprise there. Thanks populism!

Finally, for your moment of zen, here is angry soccer mom Sarah Huckabee Sanders explaining how Trump is “very confident” that America would “win” a trade war, thus proving that the administration still does not understand that everyone loses in a trade war…


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