Join institutional investors, analysts and strategists from the world's largest banks: Subscribe today
Already have an account? log in
April’s Fools
Whose put's struck lower? Jerome Powell's or Donald Trump's?
Opinions vary. Last week, JPMorgan wro
Remember the stink about Hillary’s emails? Maggie Haberman wrote about them 7 days a week….
We’ve been front running April Fools Day for weeks now…
+1.
Lyngen is right, the Trump put is certainly struck higher than the Powell put. The proof can be found in the simple fact that Trump says he’s not concerned about the stock market.
Trump has two highly reliable psychological traits: denial and projection. A recent display of projecting is one of my favorite to date: Trump said federal employees want to work from home so they can avoid work and go golfing. Then Trump flew home to Mar a Lago so he could avoid work and go golfing. If you ever want to know what Trump is doing behind the scenes, just listen to what he accuses others of doing behind the scenes.
I don’t think I need to provide examples of Trump and his displays of denial. His lawyers coached him well. So when he says he’s not watching the stock market, that he doesn’t care about it… he’s watching. He cares. My guess is that the Trump put is struck right at the 20% down level. The moment headlines start using the phrase “Bear Market,” Trump will react (this goes double for headlines with “Trump Bear Market”).
The real question is, how effective will the Trump put be? While Trump is fully capable of moving markets with his words, he misfires as often as he hits his target. Given the size of his lever, Jerome Powell might as well be Archimedes with his ability to move the world. Powell has the power to cause actual money to be created or destroyed. He can peg interest rates wherever he damn well pleases. Trump has a smartphone, a social media company, and a loud mouth. Sure, he can change all manner of policies at a whim, but the only market he can infallibly lever upwards is Volatility.
Since I have been though a seventeen year journey with my wife finally dying 5 years ago from Alzheimer’s I have a very good idea what dementia looks like. I’d add that to denial and projection, and for sure paranoia. That one hit my wife like a truck.
“What lever” is the key question. Suppose the market hits the Trump Put strike. What policy can or will Trump abandon or reverse to effectuate the put?
In the height-of-irony department we have today’s headline: ‘Trump venture will launch “stable”coin’.
I’ll bet it comes with a kill switch…
Back on topic, in practice, I suspect any Trump put will be randomly priced, so what’s really the point of valuing it relative to one’s portfolio?
Financial Times article
“Among proposals . . . is a plan to launch so-called Section 301 investigations into trading partners, while simultaneously using rarely invoked emergency powers to apply immediate tariffs in the interim . . . could include the use of the International Emergency Economic Powers Act, or a little-known US trade law, Section 338 of the Tariff Act of 1930, to potentially apply tariffs of up to 50 per cent on the country’s trading partners . . . Trump could immediately apply tariffs on vehicle imports on April 2, resurrecting a national security study into the global car industry from his first term. Trump on Monday said tariffs on cars could be announced “over the next few days” . . . a long shot — is an obscure piece of US trade law known as Section 122 of the Trade Act of 1974, which allows Washington to temporarily impose tariffs capped at 15 per cent for up to 150 days.
But the administration has not settled on its approach, with the purpose of the tariffs now in flux.
While Trump has complained of foreign countries’ unfair treatment of the US, his officials are more focused on using tariffs to raise revenues for planned tax cuts rather than as a bargaining chip with foreign capitals”.
As discussed, watch for tariff revenue being built into tax/budget – then the autogaslighting about tariffs just being a master negotiator’s tactics will “poof” and the reality of quasi-permanent global tariffs at 1930s levels will set in.
Of the positive side, “tariff winner trades” could then make money.
I kinda think we hit the put already. Trump was talking a lot of shit until the “Trump Correction” headlines started. He’s a walking spongebob episode so to Lyngen’s point if the market goes back up he might get cocky and need some “Trump Crash” headlines put him back in his place. But for now he seems like he got his yayas out.
I believe you are exactly correct.
The above article demonstrates the folly of the market paying attention to every Trump hiccup. The market thought it knew Trump right after the election and has been bouncing ever since his actions show what he is really up to. No need to play the game and to be jerked around. We now know enough to let go of the obsession and to chart our own paths as investors and countries.
A chimp with an AK47….