Heisenberg Report

Tariff Man Crashes Stock Party On First Trading Day Of December

Congrats to Donald Trump, who managed to engineer what counts as a “selloff” these days with an absurd pre-dawn tweet accusing Brazil and Argentina of conspiring against the United States by devaluing their currencies. (The Fed is in on it too, Trump reminded everyone.)

US equities’ 0.8% decline on Monday marked the worst day for the S&P since October 8. The two-day decline is now 1.3%.

Notably, the long-end held losses even as the front-end ended little changed, bear steepening the curve. The result was an unfortunate “nowhere to hide” day if you’re parked in some kind of generic balanced strategy.

It wasn’t all Trump’s fault, although he did seemingly spend the entire day tweeting, something the market could have done without.

ISM manufacturing was salt in the wound/insult to injury. Although the market expected a fourth straight contractionary read, the tick lower (and the miss versus consensus) in the headline print for November was not welcome news, and served to undercut signs of stabilization abroad, both in Europe and China.

The dollar slipped on the day in response to the weak US macro, Trump’s demands for more Fed cuts and the president’s quixotic efforts to talk the unruly greenback into submission.

Also weighing on sentiment Monday were rumors that Beijing may soon unveil the long-planned “unreliable entities” list and sanctions threats against a handful of US NGOs in response to the Hong Kong bill.

Now, we’ll presumably get some manner of conciliatory rhetoric out of the White House in order to calm things down.

Or who knows, maybe not. Maybe it will take more than 200 Dow points to convince “stable genius” Trump to wrestle his “tariff man” alter ego into submission and lock him back in the basement in the interest of not setting in motion another December bloodbath on Wall Street.