On June 18, The Daily Beast ran a pretty funny headline: “Trump Boasts ‘Nobody Knows What I’m Doing’.'”
That’s pro-level dry humor. The reference was, of course, to Trump’s accidentally hilarious response when queried by a reporter about his plans for dropping a 30,000-pound bomb on a mountain in Iran.
“I mean, you don’t know that I’m going to even do it. You don’t know,” Trump said. “I may do it. I may not do it. Nobody knows what I’m going to do.”
If nothing else that came out of Trump’s mouth that day was true, the veracity of that particular assessment was beyond reproach. At any given time, there’s no telling what Trump might do even if, over longer periods, patterns emerge (e.g., range-trading around the “TACO” acronym).
The figure below, from the latest installment of BofA’s Global Fund Manager poll, speaks loudly to just how disruptive Trump’s madman theory really is for the global economy.
From March to April, the net share of professional money managers who expected a global recession over the ensuing 12 months exploded higher out of negative territory to reflect more than four in 10 expecting a downturn. Just two months later, that metric has collapsed all the way back down to a net 36% saying a recession’s unlikely.
Needless to say, capital allocation decisions are quite difficult under such conditions. You might argue that’s what the fees are for — i.e., it’s times like these when the pros earn their keep — but it’s unrealistic to expect anyone to successfully trade an environment where US tariffs on China are 145% one day and 35% three or four days later.
The figure below’s an updated version of the BofA FMS “landing” scenario chart. Recall that the share of panelists expecting a “hard landing” jumped from 5% in January to 49% in April, which is to say just five in 100 fund managers saw a hard landing prior to Trump’s second inaugural, but nearly half expected a global recession after “Liberation Day.”
Fast forward to June, and the “hard landing” share’s back down to 13%, more or less where it stood in March.
The share of respondents who see a “soft landing,” meanwhile, is back to two-thirds after falling all the way to 37% in April, the lowest since BofA started asking the question more than two years ago.
And Trump wonders why the Fed’s stuck in “wait-and-see” mode.
The chaos is all the better to not be challenged on the clear violation of the emoluments clause. Stuffing his family’s pockets like crazy!
It won’t be long before the SS has to start locking him at night. I remember this stage clearly. I had to usher three family members through this (all in-laws).