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‘Tired Of Winning’

"It’s me right now."

“Good day in the stock market”, Donald Trump tweeted, 25 minutes after the opening bell on what would have been the sixth consecutive day of gains on Wall Street.

“People have no idea the tremendous potential our Country has for GROWTH – and many other things!”, the president continued.

Predictably, he jinxed it. It was all downhill from there and the S&P snapped its winning streak. US equities, it would appear, grew “tired of winning”.

Or maybe stocks are just “tired” of being jerked around. Because in addition to assailing the Fed for the second day in a row, Trump also lobbed more threats at China on Tuesday.

“China… devalues [its] currency and subsidizes companies to lessen [the] effect of 25% tariff”, the president reminded everyone, on the way to insisting that “companies will relocate to US”, without citing any evidence, as usual.

Then, in the same series of remarks during which he claimed that a loose piece of paper in his jacket pocket outlined details of a “secret” agreement with Mexico, Trump launched into an irritated China rant. It started with the president calling Joe Biden “a dummy” and quickly devolved into Trump bragging about holding up the trade deal.


“It’s me right now that’s holding up the deal”, Trump said. “And we’re going to either do a great deal with China or we’re not going to do a deal at all.”

Those remarks are reminiscent of his ill-advised decision to declare, on national television back in December, that “I am proud to shut down the government for border security, Chuck.”

Although risk assets shook off the Mexico escalation to rally hard through Monday, May was a different story. Trump’s escalation of the China spat was in large part responsible for what at times felt like a sequel to December. Indeed, as Barclays writes, documenting the evolution of the front-end, “a careful analysis of daily moves over the past month indicates that most of the drop in yields can be attributed to negative headlines over the US trade war on China and Mexico.”


The bank continues, noting that of the ~43bp move in 2-year Treasurys, some 35bp looks to be attributable to trade concerns.

Paradoxically, we seem to have ventured into “bad news is good news” territory last week, as expectations for rate cuts went into hyperdrive and investors bet the Fed will be able to engineer a soft landing with preemptive insurance cuts.

“Against this backdrop, the decline in broad equity indices has been relatively modest”, Barclays goes on to write. “One way to understand this is that perhaps equity investors think the Fed ease would completely offset the negative effects of the trade war.”

That’s the way Donald Trump “understands” things, that’s for sure.



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